Finer details yet to be decided, but UK company aims for clarity in structure of joint venture with Finmeccanica

BAE is taking operational control of its AMS joint venture with Finmeccanica as part of the recent agreement between the two companies to deepen their co-operation in the defence electronics sector.

The deal will see parts of BAE's avionics and communications divisions fall under Finmeccanica's control. The finer details of the new businesses, collectively called Eurosystems, have yet to be decided – BAE says this will take "months rather than weeks" - but it will include the existing BAE/Finmeccanica 50:50 joint venture, AMS, along with parts of BAE's C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) and Avionics divisions and Finmeccanica's Galileo Avionica and Marconi Selenia Communications.

BAE will have a majority stake in Eurosystems' systems integration and C4ISR business, which will consist of AMS and most of BAE's C4ISR unit. This will give it full control, the company says.

"Our shareholders don't like joint ventures where there is a lack of clarity of control. In Eurosystems the major shareholder appoints the chief executive without any restrictions," BAE Systems says.

The joint Eurosystems strategic co-ordination committee, BAE adds, will "have no executive authority and no operational supervision" but an advisory role only. Similarly, Finmeccanica will have majority ownership and control of the Communications business, comprising Marconi Selenia and BAE C4ISR's communications branch, and the Avionics business, formed out of Galileo Avionica and parts of BAE Systems Avionics.

The move will further strengthen BAE's systems and C4ISR capabilities, identified as key to the company's future by chief executive Mike Turner. AMS is the third largest company in this sector, behind Raytheon and Thales, with expected sales of €1.5 billion ($1.7 billion) this year. BAE C4ISR reported £1.1 billion ($1.8 billion) sales in 2002, but not all of this business will be merged with AMS.

Source: Flight International