Julian Moxon/PARIS

THE FRAMEWORK for Dassault Aviation's merger with Aerospatiale could be put in place within a matter of weeks, say sources close to the negotiations.

A meeting on 5 June between the French president Jacques Chirac and the German chancellor Helmut Kohl has emerged as an important focus for agreement on the merger of the two companies. A deal would clear the way for more meaningful discussion about the future shape of the Franco-German defence industry, since it would also include decisions about the privatisation of Aerospatiale.

Although the merger was demanded by Chirac earlier this year, it met initial resistance from Dassault Aviation president Serge Dassault. He is finally becoming reconciled to the merger, however, according to an industry insider.

Not only has Chirac threatened recently to nationalise Dassault Aviation if the company refuses to soften its stance on a tie-up, but Dassault himself has been weakened by accusations by the Belgian Government of corruption over a deal to supply electronic-warfare equipment for Belgian Lockheed Martin F-16s (Flight International, 15-21 May, P5).

Under the terms of the expected deal, an entity similar to the state-owned Sogepa holding company, which controls 45.76% of Dassault Aviation and 100% of Aerospatiale, would become the initial vehicle for the effective take-over of Dassault Aviation, and then for the privatisation of part or all of the resulting entity. Disagreements over the value of Dassault Aviation have proved a major sticking point, but those close to the talks believe that a solution can be worked out.

"To fail would be a disaster for the French aerospace industry," adds one senior source.

One suggested remedy is to allow the Dassault family to retain a controlling 51% stake in the new entity in return for ceding effective management-control of the group to a new management board, reporting to the state parent.

The composition of the board has yet to be defined, but it would be presided over by someone "close to the industry".

Source: Flight International