France Moves to Block Takeovers of Strategic Companies

PARIS--French Prime Minister Manuel Valls has signed a decree giving him extended authority to block foreign takeovers of companies deemed strategic, a move that could strengthen the government's hand in the battle for Alstom SA's energy assets, sought by General Electric Co.

In a two-page decree published in France's Official Journal on Thursday, Mr. Valls said he aimed to better protect the country's security interests by enlarging the scope of sectors in which foreign investors must seek prior government approval to buy French businesses.

The decree, which came as a surprise, adds energy, water, transport, telecoms and health care to an existing, narrower list of strategic sectors that included nuclear activities, encryption technologies and vaccines.

A GE spokesman declined to comment.

The new legal tool could give French Economy Minister Arnaud Montebourg a boost in his crusade for the independence of Alstom, supplier of the country's signature bullet trains.

Mr. Montebourg has told Parliament he wasn't satisfied with terms of GE's $13.5 billion cash bid for Alstom's energy operations, and has invited Siemens AG to make a rival offer.

The German engineering company has said it was working on a possible bid for some of Alstom's assets.

GE has said it was in talks with French authorities to improve some aspects of its bid, which Alstom's board has endorsed unanimously.

The decree, reported earlier by French daily Le Monde, risks impairing recent efforts by French Socialist President François Hollande to win over investors--at home and abroad--with a series of pro-business overtures. But days ahead of European parliamentary elections in which nationalist parties are expected to make a strong showing, the decree could also help Mr. Hollande show he is standing by Alstom, a pillar of France's industry.

Write to David Gauthier-Villars at [e-mail]

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