Chirac, Merkel green light EADS-Thales merger

30th March 2006, Comments 0 comments

BERLIN, March 29, 2006 (AFP) - German Chancellor Angela Merkel and French President Jacques Chirac have agreed on a merger of European defense and aerospace giant EADS and French electronics group Thales, according to a report Wednesday.

BERLIN, March 29, 2006 (AFP) - German Chancellor Angela Merkel and French President Jacques Chirac have agreed on a merger of European defense and aerospace giant EADS and French electronics group Thales, according to a report Wednesday.

The leaders agreed during a meeting in Berlin last week that EADS would take a stake in Thales by this autumn, creating a conglomerate with EUR 45 billion in annual sales, Stern magazine reported in an advance copy of its Thursday issue, citing German government sources.

A French state holding company owns about 30 percent of EADS, automaker DaimlerChrysler holds another 30 percent, the Spanish government owns five percent and the remaining shares are in free float.

However, the German government must be consulted prior to any major mergers because of EADS's prominent role in the air defense industry, the magazine said.

DaimlerChrysler board member Ruediger Grube, who also sits on EADS supervisory board, also participated in the negotiations.

The magazine wrote that DaimlerChrysler chief executive Dieter Zetsche wants to sell part of the company's stake as part of its long-term strategy of focusing on vehicle manufacturing.

It said DaimlerChrysler's EADS stake is currently worth EUR 8.6 billion.

One issue that has yet to be resolved between the French and German governments is whether parts of Thales can be sold after the merger.

Earlier press reports indicated that any tie-up between EADS and Thales would only involve certain aspects of their operations.

French daily Les Echos reported Monday that EADS offered to merge its Astrium satellite business with Thales, once the latter company has finalized a tie-up with Alcatel.

As recently as March 8 EADS co-chief executive Noel Forgeard said closer ties between EADS and Thales would make sense, but that no talks were underway.

Copyright AFP

Subject: French news

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