Jens Flottau/MUNICH

DaimlerChrysler Aerospace (Dasa) and Aerospatiale Matra are reportedly in the advanced stages of talks on a merger. DaimlerChrysler chairman Juergen Schrempp and Jean-Luc Lagardère, head of Aerospatiale Matra's supervisory board, have agreed on a "merger of equals", according to German weekly magazine Der Spiegel.

The publication says the deal awaits French Government approval and the further reduction - or withdrawal - of the state holding in newly merged Aerospatiale Matra. German company Dasa regards such a move as a prerequisite to a merger with the French giant.

While refusing to discuss details of any negotiations, Dasa hints that they have taken place, saying it is "talking to everybody". Although Aerospatiale Matra denies the reports, Dasa president and chief executive Manfred Bischoff has in the past described the two companies as "natural partners".

Parent company DaimlerChrysler had previously indicated it was considering an initial public offering as a possible first move in the divestment of its aerospace activities. Rumours have also linked the German company to a possible transatlantic merger.

Sources in Germany suggest Dasa is frustrated by the pace of French moves and is keen to accelerate the merger talks by bringing them into the public realm. The situation is complicated, however, by the eagerness of British Aerospace to aid the consolidation of Airbus through a simple merger of its stake with that of another party.

Although BAe insists it would do so only while remaining an Airbus shareholder, sources in Germany claim the UK company is contemplating a sale of its 20% stake, citing its staged withdrawal from other parts of the civil sector. Relations between Dasa and BAe are icy following the collapse of merger talks last year, however, and in practical terms any move involving BAe and Aerospatiale Matra is more likely - making it prudent for the French company to hold back from a German deal until BAe's stance has been clarified.

Dasa and Spain's Casa, with which the German group is already merging together have a 42.1% stake in Airbus, while Aerospatiale Matra holds 37.9%. If BAe was to sell, the successful bidder would become majority shareholder, as well as the bigger partner in any Franco-German merger at company level. For BAe, a major US move is looking attractive.

Source: Flight International