Julian Moxon/PARIS
ALCATEL ALSTHOM and the Lagardere Group (the parent company of Matra), have submitted bids for French electronics giant Thomson-CSF to the French Government.
A decision on which of the two will form what will become Europe's largest defence-electronics company is expected in "late October", according to sources.
The move is a key component in the re-organisation of the French aerospace industry, and the restructuring is being conducted under the umbrella of the privatisation of Thomson-CSF's parent company Thomson SA.
The privatisation is likely to involve the Government in the write-off of Thomson's Fr25 billion ($4.8 billion) debt and the sweetening of the sale with a cash injection of at least Fr6 billion.
After remaining virtually silent on the details of Alcatel's offer, its president, Serge Tchurk, has revealed that his group would, if chosen, take over 100% of Thomson SA, and the 42% stake on offer in Thomson-CSF, creating at a stroke the second largest defence-electronics company in the world.
Speculation also centres on the possibility of the UK's GEC, already allied with Alcatel through power-industry joint venture GEC-Alsthom, joining the resulting entity. Alcatel is a Fr11 billion business primarily in the defence sector, but with space and telecommunications interests.
The French Government will retain a "Golden Share" in Thomson-CSF to protect national defence interests, and some existing, private shareholders will also maintain holdings.
Lagardere Group chief Noel Forgeard has told the Government that his group intends to sell the loss-making Thomson Multimedia component of Thomson SA to South Korea's Daewoo Industries, concentrating instead on its resources on extending the defence-electronics activities of Thomson-CSF.
Lagardere claims distinct synergies between its Matra business and Thomson-CSF, and says that the acquisition would reinforce its defence activities, resulting in an enterprise with a combined turnover of some Fr45 billion.
British Aerospace, Daimler-Benz Aerospace and GEC have all been linked with the Lagardere privatisation bid.
Speculation continues on the future of Sextant Avionique, owned jointly by Thomson (66%) and Aerospatiale (34%).
One of the biggest profit earners for Thomson-CSF, Sextant Avionique has increased significantly its civil business in recent years to balance losses in military sales. It is France's biggest avionics supplier by far, and one of the few in the world able to supply complete avionics packages for civil and military aircraft.
There is some speculation that US avionics manufacturers such as Rockwell-Collins may be interested in acquiring a stake in the manufacturer.
Source: Flight International