Julian Moxon/Paris

Italy's Alenia Difensa and the UK's GEC-Marconi are preparing to present details of a joint merger study to their respective Governments. A decision on whether to approve the deal is expected from London and Rome by the end of the month.

Prospects for a tie-up between the two companies have gained ground following a directive from the Italian Government that the majority of assets of state-holding company IRI, which owns Alenia parent Finmeccanica, should be privatised within three years.

According to Alenia Difesa president Gianmaria Gros-Pietro, this means that "some, or all" of its divisions will be available for mergers. GEC-Marconi is the main hope for what he calls "an overall agreement" covering all sectors of each company's activities in "technological, manufacturing and commercial" collaboration. GEC-Marconi declines to comment.

"We are proposing various solutions covering all five of our divisions. We believe the two companies are very complementary," says Gros-Pietro.

The Italian company produces a wide range of defence equipment, including naval systems, avionics, radars, communications systems and defence electronics - a portfolio similar to that of the UK firm .

A memorandum of understanding signed in March between Finmeccanica and GEC-Marconi says the two companies share a "common vision" of the future, but left open the details of how any merger might work. Gros-Pietro says that, while it is "too early" to talk about the potential organisation of the combined companies, "-we are looking at ways of saving money, and that means that some divisions could be merged into 50:50 joint ventures".

The Italian deal is one of several being pursued by the UK company as Europe's defence-electronics industry restructures, having shown interest in ties with Siemens in Germany and Thomson-CSF in France. News of the merger talks comes as new GEC boss George Simpson prepares to reveal his re-organisation plans.

Source: Flight International