Alcatel-Lucent and Nokia: a very un-French deal

This deal seems very un-French - suspiciously so, if you are a Nokia shareholder.

A socialist government in Paris, fresh from blocking (for the second time) the sale of DailyMotion to foreigners - because the upstart video platform was deemed a strategic asset - has just waved through the handover of one of the world's top telecoms technology companies to a Finnish rival.

Nokia's acquisition of Alcatel-Lucent was not even dressed up as a merger of equals. It is a clean takeover. The headquarters will be in Finland, a faraway country about which the French know little. The new group will be called Nokia Corporation and Nokia's existing boss will be in charge. Jean-Baptiste Colbert, Louis XIV's finance minister and father of France's strong tradition of state interventionism, must be revolving in his tomb.

It is less than a year since fiery leftwinger Arnaud Montebourg, then economy minister and proclaimer of what he called Colbertism 2.0, charged into battle over plans by General Electric of the US to take over most of the assets of Alstom, France's engineering champion. That in turn followed Alstom's "rescue" from takeover by Germany's Siemens a decade previously by Nicolas Sarkozy, former right-of-centre president and no mean etatiste himself.

So does France's relatively meek acquiescence in the Nokia deal signal a volte-face in the state's approach to cross-border deals? Even those involving important industrial and technology assets?

The simple answer is no. That was amply demonstrated this month when Emmanuel Macron, Mr Montebourg's successor as economy minister, stepped in to stop partly state-owned Orange selling DailyMotion to Hong Kong's PCCW, steering it into the arms of Vivendi, the French media group, instead.

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The government also insisted on some strict conditions for the Alcatel deal that may yet come back to bite Nokia - or at least its Finnish employees. The Alcatel side talks of an agreement to "ring fence" jobs and research facilities in France, despite the deal's call for €900m in cost synergies. The small print is bound to include provision for French control over Alcatel's submarine cable networks, which are vital, among other things, to state surveillance of communications traffic.

But what the Nokia-Alcatel takeover does show is that, beneath the interventionist instinct lies a pragmatic streak that has often belied the stereotype of flamboyant state protectionism.

When Lafarge, a big multinational cement maker with a large French workforce, agreed under Mr Montebourg's watch to a takeover by Switzerland's Holcim, there was barely a murmur from government. Even in the GE-Alstom drama, Mr Montebourg eventually conceded most of GE's demands - and his alternative scheme was, in effect, a takeover by none other than Siemens.

What makes a difference, potential dealmakers take note, is laying the groundwork with the government. Bruno Lafont, Lafarge chief executive, diligently kept ministers abreast of the talks with Holcim. Ditto Michel Combes at Alcatel. By contrast, Alstom's Patrick Kron blindsided Mr Montebourg on how advanced his talks were with GE, infuriating the combustible minister.

Above all, this week's deal shows how Paris can be hard-headed about corporate globalisation when confronted with reality. The 2006 merger of Alcatel and Lucent was a nightmare fusion of two weak companies with vastly different cultures. Mr Combes is only now putting it on a sounder footing, but it continues to lack critical mass.

Unwilling to go through the agonies of another merger, the attitude in Paris seems to be to secure French jobs but let the Finns take on the tough task of finishing the job. Bon Courage Nokia.

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