Thales CEO forecasts fresh round of European consolidation as Finmeccanica’s UK chief raises speculation on tie-up
Europe’s aerospace industry is ripe for a second wave of consolidation after the flurry of mergers that created EADS and Thales early this decade, says Thales chief executive Denis Ranque.
But Ranque maintains that reports about an imminent tie-up between the French avionics and defence group and Italy’s Finmeccanica are “press speculation”. However, a senior Finmeccanica executive suggests a possible merger is being taken seriously by both sides.
Speaking at a pre-Paris air show dinner in the French capital last week, Ranque said Thales was “well placed to take further steps” after coming into being five years ago with the merger of Thomson CSF and Racal of the UK. But he added that “we have no strategic problem to stay as we are”.
He said any merger proposal would be judged on whether it delivered value for the company’s owners – in Thales’s case, the French government and French firms Alcatel and Dassault, as well as employees and the public. “We have shareholders like any other company,” he said.
In an interview with Flight International in London last week, Finmeccanica’s new UK chief executive Alberto de Benedictis was positive on the prospect of discussions. “We have indicated our interest in being included in the discussions relating to the future of Thales,” he said. “I think Thales has expressed an interest in having us involved in future discussions.”
An arranged marriage between EADS and Thales – controversially advocated by the French government late last year – would be “a competitive development that would concern us because it would create a very significant defence entity in continental Europe that we would have to react to...possibly we would have to look at other alliances,” de Benedictis said.
Meanwhile, Ranque suggested that Thales would not risk antagonising the Pentagon by seeking to make arms sales to China once the European Union arms embargo is lifted. Noting that individual countries’ export restrictions mean very few defence products can be sold to China anyway, he added: “We have a €1 billion business in the USA, half of which is in defence. We are not going to jeopardise this for additional sales in China.”
He said any decision to target the Chinese market would be based on business judgement. “We have given assurances to the USA that we will be reasonable about this. That’s just business.”
Finmeccanica is continuing to focus on its core business, says de Benedictis.
“We are awaiting a response from [public holding company] Fintecna who have expressed an interest in acquiring a controlling interest in [energy subsidiary] Ansaldo Energia.” The deal could go ahead if the sale price is sufficient, he adds. If not, Finmeccanica would consider seeking alternative methods of deconsolidating its non-core activities.
Recent acquisitions, including the remaining stake in AgustaWestland, and internal reorganisations, leading to the newly rebranded Selex defence electronics business, are key to the company’s strategy: “We have important areas of our business, two of which we want to be premier on a world scale – one is defence electronics, the other is helicopters.”
MURDO MORRISON/PARIS & HELEN MASST-BERESFORD/LONDON
Source: Flight International
