Hollande said a body had been found, along with a severed head with a message. A suspect has been arrested and identified, he said.
Interior Minister Bernard Cazeneuve, speaking at the scene of the attack, said the suspect, who was from the Lyon area, was “somebody who was in touch with (Muslim fundamentalist) Salafists.”
An intelligence report was opened on the man in 2006 because of suspected radicalization, he said, but this was not renewed in 2008.
“He has been under surveillance, but he was not known as being involved in any terrorist act,” Cazeneuve said. French authorities are “investigating any other people that could be accomplices,” he added.
“The dangerous elements were neutralized immediately after the crime was committed,” he said.
The attack took place just before 10 a.m. local time (4 a.m. ET), Hollande said, when a vehicle was driven at high speed into the factory site and into a building housing gas canisters.
“There is no doubt that the intention was to provoke an attack, an explosion,” he said.
Hollande expressed his condolences and solidarity with the victims of the attack.
Witness: Islamist flags
French news agency AFP earlier reported that a suspected Islamist attacker pinned a severed head covered with Arabic writing to the gates of the factory
A source cited by BFMTV also said a severed head had been put in front of the company, next to which was found an Islamist flag. CNN has not been able to confirm the report independently.
A man described as a witness, whose name was given as Patrice, also told BFMTV that a group of men carrying Islamist flags forced their way into the factory, beheaded a person and targeted gas tanks.
Le Monde newspaper cited unidentified sources as saying that two people rammed a vehicle into the building, causing the explosion. Banners in Arabic that haven’t yet been examined were found at the scene, the paper added.
The Paris prosecutor’s office said its anti-terrorist section was opening an investigation into the attack.
It is investigating possible murder and assassination attempts by organized gangs in relation to a terrorist enterprise; destruction and degradation resulting from explosive materials by organized gangs in relation to a terrorist enterprise; and terrorist conspiracy to commit crimes against people, the Paris prosecutor’s office said in a statement.
Security stepped up
The company whose factory was attacked, Air Products said in statement that its priority was to take care of its employees, “who have been evacuated from the site and all accounted for.”
Emergency services have contained the situation, it said. “The site is secure. Our crisis and emergency response teams have been activated and are working closely with all relevant authorities.”
A spokeswoman for the company, Nicola Long, earlier said there had been an explosion and a fire that was extinguished.
She was not able to give any information on any deaths or injuries. The company supplies gases for industrial use.
The factory is in an industrial area in the small town of Saint-Quentin-Fallavier, between Lyon and Grenoble.
Security has been heightened in France since an Islamist terror attack in January, when attackers targeted the satirical Charlie Hebdo magazine and a kosher supermarket in Paris.