Julian Moxon/PARIS
FRENCH DEFENCE minister Charles Millon says that the decision to favour Lagardere's bid for the privatisation of Thomson will pave the way for creation of the world's "second-largest weapons-systems group" and Europe's biggest defence-electronics company.
Final approval for the bid will now be made by the French privatisation committee, which is expected to give a ruling before the end of the year.
Lagardere, which will merge the Thomson-CSF defence-electronics business with its own Matra Defense-Espace grouping, had faced a rival bid from Alcatel. Lagardere appears to have been favoured for political rather than financial reasons, suiting Government plans to create a strong, vertically integrated, defence-electronics grouping within France.
Other parts of the Thomson group will be sold off. The heavily indebted Thomson Multimedia is to go to South Korea's Daewoo Industries, but with the proviso that its head office and management will remain in France. Franco-Italian microprocessor manufacturer SGS Thomson will be ceded to state-owned CEA Industrie and France Telecom.
Lagardere will pay a symbolic franc for Thomson, which has losses running to Fr25 billion ($4.8 billion). The group will have to come up with around Fr7.8 billion, if the present offer is accepted, to buy out other shareholders which own 41% of Thomson-CSF. To make the privatisation possible, the French Government will have to recapitalise Thomson with some Fr11 billion of aid - a move which will need to be vetted by the European Commission.
The Government also retains a "golden share" of Thomson Matra, because of its strategic importance. Lagardere will hold around 60% of the new company, which will have a combined annual turnover of Fr60 billion.
The new company, relieved of debt, could be looking for alliances elsewhere to add to those it already has in missiles and satellites.
The new group will be centred around four main activities:
Detection systems (radars): Thomson, the UK's GEC and Dassault Electronique are teamed. Matra brings its military observation satellite business. Thomson is France's supplier of radars for combat aircraft and has an extensive air-traffic-control business;
Command and control: Matra and Thomson each have substantial activities in battlefield-communications equipment, and may rationalise their activities.
Source: Flight International