Daimler-Benz Aerospace (Dasa)has thrown its weight behind Lagardère's bid to take over Thomson-CSF, offering to contribute its space, missiles and eventually defence electronics businesses with the aim of creating a series of powerful European units to match the size and scope of the emerging US giants.

The move is a serious blow to the rival bidding team of Alcatel Alsthom and Dassault Industries, which officially submitted its bid for Thomson-CSFon 7 May, the day after news of the Dasa-Lagardère teaming.

The new French Government, which is due to emerge after elections at the start of June, will now face a tough choice between a European solution backed by the UK and Germany, or the essentially French option offered by Alcatel/Dassault and with Aerospatiale still in the wings

British Aerospace has already given heavy backing to the Lagardère bid, in the wake of the missiles joint venture signed with the French group's Matra subsidiary in 1996. BAe says that it will make £300 million ($485 million)available to support the bid.

Under the wide-ranging "strategic agreement", Dasa says that it would pool its space interests with those of MatraMarconi Space, the joint venture between Lagardère subsidiary Matra and the UK's GEC-Marconi.

Dasa would hold an equal share in the enlarged business, covering satellite, launch-vehicle and orbital-infrastructure activities.

Matra BAe Dynamics will also take a 30% stake in Dasa's loss-making LFK missiles subsidiary. Dasa says, however, that the link would allow LFK to pursue "further national consolidation" within the German market. Industry sources confirm that Dasa is being backed by its Government in pursuit of a merger with Bodenseewerk Gerätetechnik (BGT), the missiles subsidiary of the privately owned Diehl group.

Dasa says that it would also bring together its defence-electronics interests into an equal joint venture with Lagardère/ Matra.

Dasa support helps Lagardère's case that, with Thomson-CSF, it would be best-positioned to bring together Europe's main players in space and defence electronics. The merged company would rank third in the world behind Lockheed Martin and Boeing (after its Rockwell and McDonnell Douglas acquisitions).

The combination of Matra BAe Dynamics with the Dasa and Thomson-CSF missiles businesses would create a clear European leader, with sales of $2.3 billion, to challenge the pending Raytheon/ Hughes merger. The Franco-German-led Euromissile business could be also eventually be brought into the company, says Dasa.

Dasa's support for Lagardère appears to dent Alcatel's hopes of tempting the German company back into talks on space and missiles with Aerospatiale in the wake of a successful Thomson-CSF bid.

Source: Flight International