EADS to make bid for Thales

12th November 2004, Comments 0 comments

PARIS, Nov 12 (AFP) - The European Aeronautic, Defence and Space Company (EADS) will soon launch a bid for French defence electronics group Thales in a deal orchestrated by the French government, which owns just over 15 percent of EADS and 31 percent of Thales, the newspaper Les Echos reported Friday.

PARIS, Nov 12 (AFP) - The European Aeronautic, Defence and Space Company (EADS) will soon launch a bid for French defence electronics group Thales in a deal orchestrated by the French government, which owns just over 15 percent of EADS and 31 percent of Thales, the newspaper Les Echos reported Friday.

The French finance ministry quickly dismissed the report as "rumour," while at EADS a company spokesman had no comment.

Les Echos, which did not cite its source, said "the boards of EADS and Thales should soon be consulted ... on the principle of an offer by the European group for the French electronics group."

The transaction would likely make EADS, which holds an 80 percent stake in aircraft manufacturer Airbus, a formidable competitor for Boeing of the United States, which in addition to commercial aviation has extensive defence activities.

Les Echos said the combined entity would have annual sales of about EUR 40 billion (USD 52 billion) and be present in all sectors of the aviation industry.

It said that as part of the deal, telecommunications equipment provider Alcatel and Dassault Aviation would sell their minority stakes in Thales.

Alcatel holds 9.5 percent of Thales and Dassault Aviation owns 5.7 percent. Thales would meanwhile sell its communication business to Alcatel while Dassault would acquire Thales' Airborne Systems division.

EADS shares fell back on the Paris Bourse in early trading, losing 2.33 percent to EUR 24.32 on a stronger overall market. Thales shares by contrast jumped 5.82 percent to EUR 33.50, with analysts taking seriously the scenario outlined in Les Echos.

"This operation certainly seems political but it could also stem from Thales's inability to resolve its strategic and financial difficulties on its own," said analyst Agnes Blazy at Credit Mutuel CIC.

Added Stephane Houri of Fortis Bank: "For Thales shareholders, this is perhaps a good option since it would allow for an honourable outcome in a strategically fluid context. That in the short term should have a positive impact on Thales's share price."

© AFP

Subject: French News

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