Andy Nativi/GENOA

Thomson-CSF is understood to be negotiating with EADS (European Aeronautic Defence and Space) and Finmeccanica with the aim of establishing a new European avionics and radar house.

The venture would bring together the French electronics giant's radar business and its Thomson-CSF Sextant subsidiary, EADS, former DaimlerChrysler Aerospace's (Dasa) avionics activities, and the Fiar radar and sensors and Galileo optronics businesses of Finmeccanica's Alenia Difesa division.


The Italian company is also locked in negotiations with BAE Systems over the size of payments it must make in return for a 50% stake in Alenia Marconi Systems (AMS), and a 25% holding in the 'New' Matra BAe Dynamics' (MBD) missiles house.

According to the 'Jupiter' plan, the avionics businesses would be grouped under Thomson-CSF, with EADS and Finmeccanica receiving shares in the new company, commensurate with their contributions. Such a move would end Thomson's comparative isolation in Europe by moving it closer to EADS, and would block a possible avionics alliance between Finmeccanica and BAE Systems.

EADS is also looking to strike a deal with Thomson-CSF over a possible defence electronics tie-up to strengthen its non-Airbus activities (Flight International, 8-14 August).

The latter option remains possible, with negotiations reportedly continuing between the UK and Italian companies. The original AMS alliance between Finmeccanica and GEC Marconi was due to have an avionics aspect, but talks stalled when BAE bought Marconi Electronic Systems, with the subsequent restructuring of AMS.

Though Finmeccanica is in a strong bargaining position, the size of its potential partners is such that it will not be able to secure its preferred option, a 50:50 joint venture. The Italian group could pay a premium to obtain a bigger stake, but is already doing so to improve its position in AMS and the new European missile alliance being formed around MBD.

BAE chief executive John Weston tells Flight International that the valuation of BAE activities to be added to AMS has been completed, and the terms of the enlargement - including Italian payments to retain a 50% stake - are being finalised. "The due diligence phase to fix the value of the BAE Systems' activities to be transferred has been completed in July and I feel that an agreement will be ready for signature by the end of the year," he says.

Talks on folding the missiles business of AMS into New MBD should also be completed by "year-end", Weston says. Finmeccanica is seeking a 25% stake, far higher than its industrial share in the venture.

Although Weston will not comment on the likely payment, speculation in the Italian press suggests Finmeccanica may have to pay L1,000 billion ($463 million), plus the relevant assets, to secure its position in the two ventures.

Source: Flight International