European missile house deal to be signed 'within days'

Andrew Doyle/MUNICH

BAE Systems, EADS and Finmeccanica are this week due to formally sign the long-awaited deal to create pan-European missile house MBDA.

The new company will combine the BAE/EADS joint venture Matra BAe Dynamics (MBD) with the missile business of Alenia Marconi Systems and minor Spanish interests. BAE and EADS will each own 37.5%of the new company, with the Italian side holding the balance.

"The partners have agreed the financial aspects of the enlargement," says BAE chief executive John Weston. "They are looking at the regulatory process now, and how they want it to be handled.

The question is whether it goes to Brussels for approval, or whether the nations concerned invoke their right to vet defence mergers themselves," he says.

EADS confirms that the deal is expected to be signed "within the next few days".

However, German missile companies LFK - owned 70:30 by EADS and MBD respectively - and BGT, in which MBD has a 20% stake, will not initially be incorporated into MBDA. Talks between EADS and BGT majority owner Diehl continue with the aim of first consolidating the German missile interests into a single entity.

Industry sources say a deal to combine LFK and BGT into a single entity 51%-owned by Diehl and 49%by EADS was close before EADS co-chairman Manfred Bischoff raised last-minute objections. EADS disputes this but declines to comment further.

Another potential stumbling block to the integration of LFK and BGT into MBDA is the issue of product overlap in several areas.

MBDA is to be headed by MBD chief executive Fabrice Brégier.

In order to hold a significant stake in MBDA, Finmeccanica is expects to make a one-off cash payment of several hundred million euros to its partners.

Source: Flight International