Europe's defence industry enters a new era today when British and French missile chiefs share a platform at Farnborough ‘96 to launch what could be the first stage in the consolidation of the European guided weapons industry.

Under a new corporate identity, Matra-BAe Dynamics, the former rivals also plan to extend their alliance by joining forces in a bid to take over French missile and electronic group Thomson SA when it is privatised by the French government.

With a turnover of $1.5 billion annually and a $4 billion order book, the new Matra-BAe joint venture will create a guided weapons company with a set of products to compete with the American giants.

The Farnborough ‘96 unveiling of the new set-up will be made by the new company's chairman, John Weston from BAe, and chief executive Noel Forgeard of Lagardere, deputy CEO Roger Hawksworth from BAe, and Jean-Paul Gut from Lagardere, who will be marketing supremo.

The Matra-BAe deal will be finalised by the end of the year, when government regulatory authorities are due to pronounce on the deal, but senior BAe sources describe this as formality.

With some 6,000 employees, the new firm will be a major European high-tech employer. The company is keen to stress that the move is unlikely to result in large-scale rationalisation or lay offs.



"We have complementary products and are aiming to be a centre of excellence in guided weapons," a spokesman says. "The merger follows the pattern of American consolidations."

Head-to-head confrontation with the Americans was not the main motivation behind the link-up, says the source, with co-operation across the Atlantic also on the agenda. "We want to provide a strong political platform for co-operation in the European industry."

The new company was born on the back of the UK Government's recent decision to buy a version of the French Apache long-range cruise missile, called Storm Shadow, for the Royal Air Force.



Its next major project is the launching of the Meteor Future medium Range Air-to-Air Missile (FMRAAM) to win a $800-900 million order for the RAF and then win orders from other Eurofighter users.

This will take the new company head-to-head with American rival Hughes in the first test of its mettle.

The bid by Lagardere to buy up Thomson SA is being backed by BAe and DASA, up against the French electronics and space company Alcatel-Alsthom. Matra officials at Farnborough ‘96 say they are ahead in the race to clinch the deal.







Source: Flight Daily News