Julian Moxon/PARIS

France's Thomson-CSF has won a half share in Australian Defence Industries (ADI) after succeeding in a joint venture bid for 100% of the state-owned defence contractor.

The Australian Government selected a bid from the French company and Australian infrastructure developer Transfield - together known as Transfield Thomson-CSF Joint Venture - ahead of an application from British Aerospace, which had teamed with Australian defence company Tenix.

The BAe bid is thought to have failed because of government concern over BAe's merger with GEC Marconi. Both are already involved in Australia, and had the joint offer with Tenix been chosen, the pair would have had a virtual monopoly in Australia's defence sector.

The value of the Thomson-CSF investment has not been revealed, although its president, Denis Ranque, refutes reports that the total cost of ADI was about Fr900 million ($145 million).

He says the deal - to be completed by the end of September - was agreed at a "very reasonable" price, given the Australian company's 1998 turnover of A$550 million ($360 million).

Thomson-CSF has a major presence in Australia, having won contracts to modernise its civil air traffic control system and to supply sonars for naval submarines. As part of its bid, the European company guaranteed that ADI would continue to operate from Bendigo, Lithgow, Newcastle and Albury.

Thomson-CSF has synergies with ADI in naval combat systems, surveillance, communications, and simulation and training. The pair also have similar operating margins of about 5%. Ranque expects the acquisition to have a positive financial effect from 2000.

Australia's military equipment budget - A$5 billion in 1998 - is growing at 5% a year, with major contracts for frigate arms systems and 20 combat helicopters in the offing.

Source: Flight International