South African defence specialist Denel is close to completing the sale of a controlling stake in its Airmotive unit to France's Turbomeca, while talks are continuing on BAE Systems' investment in its aerospace arm.

The Pretoria government, which will retain 49% of Airmotive via Denel, has already signed a letter of intent with Snecma subsidiary Turbomeca, and expects to announce a deal in the next two months. Finalisation of the sale is expected within 12 months.

"This is the first time for us that a public enterprise has been privatised and an outside company gets majority control," says Denel deputy chief executive Max Sisulu. "For Turbomeca to invest and bring in technology, it wanted a controlling interest. Airmotive is not seen as a strategic interest."

Turbomeca will transfer technology for manufacture, repair and overhaul of a range of its products. Airmotive has already been given worldwide servicing rights to the Snecma Atar family of military engines, and is the designated African service centre for the Arriel, Arrius, Artouste, Makila and Turm/o family of turboshafts.

Denel is also hoping to wrap up talks with chosen equity partner BAE by year-end. The UK company has agreed to take a 20% stake, although Sisulu says this could increase to 25%, with the focus now on a strategy for restructuring Denel. "We're looking at selling a 20-25% stake for now, though it's possible after a couple of years BAE may buy more," he says.

Source: Flight International