France, Germany to discuss EADS, Thales bid

15th November 2004, Comments 0 comments

BERLIN, Nov 15 (AFP) - Rumours of a possible tie-up between French defence electronics group Thales and the European Aeronautic, Defence and Space Company (EADS) are to be discussed by the German and French economy ministers later this week, a German government spokesman said on Monday.

BERLIN, Nov 15 (AFP) - Rumours of a possible tie-up between French defence electronics group Thales and the European Aeronautic, Defence and Space Company (EADS) are to be discussed by the German and French economy ministers later this week, a German government spokesman said on Monday.

"We expect that this topic will be touched upon when Wolfgang Clement meets with Nicholas Sarkozy" in Berlin on Tuesday, a spokesman for the German economy ministry said at a regular news briefing here.

Clement and Sarkozy are scheduled to attend the first meeting Tuesday of a Franco-German working group of top corporate executives set up to explore possibilities for industrial cooperation between the two eurozone heavyweights.

Press reports have suggested the French government is looking to sell Thales, in which it holds a stake of 31.3 percent, to EADS, in which it owns 15 percent.

The reports said such a proposal was encountering strong resistance in Germany, because it would shift the balance of power within EADS towards France.

In Paris, Thales formally denied Monday it had convened a board meeting to discuss "any form of linkage with EADS".

Separately, French Defence Minister Michele Alliot-Marie said that European defence groups needed to continue developing alliances to better meet global competition.

However, she refused to comment on a potential merger of EADS with Thales, as indicated by the French press on Friday.

"There are a lot of rumours, and it is not for me to comment on rumours," Alliot-Marie said at a meeting with the Anglo-American Press Association of Paris.

But in light of growing competition from Russia, China and Asian countries, "it is important for European companies to draw closer to each other", she said.

The merger of France's Direction des Constructions Navales (DCN) shipyards with Thales, for example, is driven by "a genuine industrial logic", Alliot-Marie added.

She said the opening of DCN's share capital to private investors, already authorised by a change in French law in October, would occur in the coming weeks.

Alliot-Marie also hoped to see more industrial tie-ups in the naval and land defence areas, along the lines of the cooperation on drone surveillance planes between EADS and Dassault Aviation.

"Of course, this doesn't depend on us (at the defence ministry), but we have the capacity to encourage and favor this process," she said.

Meanwhile, investors appeared to dismiss Thales's denial of an imminent board meeting to discuss a merger with EADS.

Shares in Thales rose 0.69 percent to finish at EUR 33.52 in Paris, building on recent sharp gains and reversing early losses after the market gave no credence to the company's denial of talk of the board meeting, dealers said.

"The market doesn't believe in Thales' denial," one Paris-based dealer said.

EADS was down 2.07 percent at EUR 24.10, continuing Friday's losses when a report in the French business newspaper Les Echos claimed the French finance ministry was orchestrating a merger between EADS and Thales.

The CAC 40 index closed on a loss of 0.37 percent at 3,820.97 points.

© AFP

Subject: French News

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