Signals are emerging of the stance the US Government is likely to take on major transatlantic mergers. Senior US Department of Defense officials are saying they will not stand in the way of mergers if the security of key US weapons technology is not at risk.

US deputy defence secretary John Hamre says the primary concern is maintaining security. "We will review any proposal that comes to us. Security is our number one concern. When companies are involved in advanced technology- the very thing we want to win wars with in 10 years, we want to know we can protect it," he says.

Hamre adds, however, that weapons collaboration on sensitive projects is ongoing within NATO "so it is possible that we could have alignments". He says "we have to confront the issue. We want our alliance to grow together, not grow apart, and that means we have to confront the industrial side of it."

In May, Hamre said British Aerospace's purchase of GEC's Marconi defence unit was "unfortunate" because it blocked a deal with Lockheed Martin and was "not a bridge to the transatlantic industrial base". John Weston, BAe's chief executive, admitted he did not want to compete with a combined Marconi/Lockheed Martin in the European market.

The Clinton Administration has already blessed similar deals: GEC's $1.4 billion acquisition of Tracor makes the UK firm's US arm the sixth largest US defence electronics contractor. It has already bought other US defence firms, including the former Hazeltine, Kearfott and Lear Siegler.

Meggitt, meanwhile, has received the blessings of US anti-trust regulators to buy equipment producer Whittaker for $380 million.

Major US companies, blocked from further big domestic acquisitions after the government's decision to ban the Lockheed Martin/Northrop Grumman merger, also await ground rules from Washington before they move on mergers with European rivals.

Jacques Gansler, the Pentagon's acquisition chief, flagged up the issue last year and now says "this is a top priority and we are looking for ideas to help us evolve a new posture". He says "co-operations represents a tremendous opportunity" but there must be "safeguards to military technology". Gansler concludes that there are certain nations where the USA "should be able to relax some traditional foreign ownership controls while still applying the normal anti-trust considerations, as well as the normal security controls for all potential transatlantic linkages".

Source: Flight International