France's Aerospatiale and Matra Hautes Technologies are accelerating merger plans and negotiating with other European companies to join the missiles and space groupings resulting from the July agreement between the two companies.
Yves Michot, the Aerospatiale president and his Matra counterpart Philippe Camus, have made clear that attracting other companies into a European missiles grouping is their "highest priority", and say they have already begun "global talks" with Thomson-CSF, Saab Dynamics and the Marconi Electronic Systems (formerly GEC-Marconi) alliance with Alenia Difesa, with the aim of producing a single European missile grouping.
The merger of the two French groups will create the world's second largest tactical missiles group, behind Raytheon, with combined sales of Fr11 billion ($1.83 billion). Once the merger is completed, the missiles business will account for around 13% of the total Fr 81 billion sales expected to be achieved once Aerospatiale's 45.76% share of Dassault Aviation is taken into account.
Fabrice Brégier, chief executive of Matra BAe Dynamics, adds that despite being smaller than its US rival, the new missiles entity will have a "more complete range of tactical missiles". He says the "natural synergy" of Aerospatiale's ground-to-air and naval missiles line up with the Matra BAe Dynamics air-launched range. He says the amalgamation of the two activities should be completed next year.
An attack on costs is imminent, in the hope of improving operating margins, now between 4% and 4.5% - about half the figure seen by analysts as reflecting adequate economic performance.
Bregier says the margins will have to be significantly improved over the next three to five years.
Aerospatiale has already restructured its missiles division, reducing from four to one the number of sites around Paris, with further benefits to come from joint use of the 70 offices operated around the world by the two operations.
By the time the merger is complete, the resulting company will account for one-quarter of a world missile market estimated at being worth Fr50 billion a year.
The future of any European space alliance is less clear, however, following the resignation of Alcatel president Serge Tchuruk from the Aerospatiale board in protest at the "conflict of interest" resulting from the merger with Matra.
This resulted in Aerospatiale returning to the space business after its satellites division had been sold to the new Alcatel Space grouping. "We're ready to discuss the creation of a space entity after we have merged our two businesses," says Matra Marconi Space president Armand Carlier. He points to the growing satellites business, with the orderbook expected to grow from Fr11.2 billion in 1997 to 20.3 billion in 2002.
Source: Flight International
