Update: 11:10 a.m. ET: Several French officials said the decapitated victim found in an attack on an American-owned gas factory in France was the suspect's employer.
The suspect, identified as Yassine Salhi, is a resident in his 30s of the Lyon suburb of Saint-Priest.
French President Francois Hollande raised the security alert to the highest level for three days in the southeastern region where a suspect attacked an American gas factory.
Update 10 a.m. ET: Authorities identified the decapitated man, whose head was found hanging at the gate of an American gas factory in France, as a local businessman.
The security official, who was not authorized to speak to the media and requested anonymity, said the victim was the head of a local transportation company and was believed to have been killed before the explosion. His name was not released.
A photo taken on June 26, 2015 shows the Air Products gas factory in Saint-Quentin-Fallavier, near Lyon, central eastern France, after a suspected Islamist assault in which a decapitated head was pinned to the gates. An attacker carrying an Islamist flag killed one person and injured several others at a gas factory in eastern France, according to a legal source. The suspected attacker entered the factory and set off several small explosive devices, the source said. (JEAN-PHILIPPE KSIAZEK/AFP/Getty Images)
The attack on the Air Products plant in southeastern France occurred Friday. Labeled a terrorist attack, the suspect, who is in custody, also plowed into gas canisters, causing an explosion. Two were injured in addition to the man who was beheaded and killed.
Special forces of France's Research and Intervention Brigades (BRI) escort an unidentified woman as they leave the building housing the apartment of a man suspected of carrying out an attack in Saint-Priest near Lyon on June 26, 2015. A 35-year-old man arrested in connection with the attack on the Air Products gas factory was investigated nine years ago for radicalisation and has links to the Salafist movement, Interior Minister Bernard Cazeneuve said. He identified the suspect as Yacine Salhi, 35, who was known to have lived around Lyon, France's second largest city, near the site of the attack. (PHILIPPE DESMAZES/AFP/Getty Images)
Update 8:35 a.m. ET: Air Products, the plant that was attacked in southwestern France in an apparent terrorist attack Friday, has said all of its employees are accounted for. It has not confirmed whether its staff were among the two people reported injured and one dead. The U.S.-based company said in a statement that all employees have been evacuated from the site, which is now secure.
It said "our crisis and emergency response teams have been activated and are working closely with all relevant authorities."
Friday morning, a car rammed the gate and plowed into gas canisters, touching off an explosion, at the factory near Lyon on Friday morning. A decapitated body and flags with Arabic writing were found at the scene.
French Interior Minister Bernard Cazeneuve told journalists the "people who could have participated in this abject crime are in custody after having been arrested."
Cazeneuve added the suspect was believed to be from the area and had been flagged in 2006 for ties to Islamic extremists, but surveillance was dropped in 2008.
Original story as follows.
PARIS (TheBlaze/AP) -- France opened a terrorism investigation after an attack at a gas factory Friday left one person decapitated and multiple people wounded, officials said. One official said banners with Arabic writing were found near the body.
Two French officials said the attack began mid-morning when two men crashed a car into the entrance of Air Products de Saint-Quentin-Fallavier factory in southeastern France, hitting gas canisters and touching off an explosion.
French police secure the entrance of the Air Products company in Saint-Quentin-Fallavier, near Lyon, central eastern France, on June 26, 2015. An attacker carrying an Islamist flag killed one person and injured several others at a gas factory in eastern France, according to a legal source. PHILIPPE DESMAZES/AFP/Getty Images)
One of the attackers, identified as a 30-year-old, was arrested, they said. It was unclear what happened to the other attacker.
"It is definitely a terrorist attack," Joelle Huillier, Socialist member of parliament, said on BFM TV, according to Bloomberg."“I am terrified. No one is safe."
The decapitated body and banners with Arabic inscriptions were found near the factory entrance, one of the officials said. The French publication Dauphine Libere (translated via Google Translate) reported that the head of the decapitated man was "covered in Arabic inscriptions" and that his body was hanging on a fence. The news site reported that this man was not an employee of the gas plant.
Henry Samuel for the Daily Telegraph told Sky News one of the attackers was "allegedly carrying a flag of the Islamic State and he said he was a member of the IS."
Officials speaking to the Associated Press did so on condition of anonymity because they were not authorized to speak to the news media.
The suspected attacker entered the factory and set off several small explosive devices, the source said. A decapitated body was found nearby the factory, another source said. (PHILIPPE DESMAZES/AFP/Getty Images)
In a statement, France's anti-terror prosecutor said an investigation was opened into the attack, which he said was carried out by "a terrorist group."
France went on high alert after the Charlie Hebdo attack in January that left 20 people dead in the Paris region, including the Islamic extremist attackers.
The Associated Press contributed to this report.