Safran and Thales have resumed talks on asset swaps as the French government seeks to streamline procurement involving the two defence groups.
“Safran believes there are obviously opportunities and means to optimise French defence industrial and technological capabilities,” the aero-engine and defence group said on Tuesday.
If successful the move will rationalise the tender process for defence contracts and trim research and development costs for defence programmes.
Both Safran and Thales confirmed the move on Tuesday after Laurent Collet-Billon, head of France’s defence procurement office, told the daily Les Echos that there were hopes for a decision to be reached in principle by the summer.
However, Safran stressed it was too early to state whether the discussions could lead to an agreement and declined to specify the elements under discussion.
It added that it was considering options “in the interest of their customers, notably their French customer, their shareholders and employees”.
The French state is Safran’s largest shareholder with a stake of more than 30 per cent. It also holds 27 per cent of Thales.
“The French state hopes to form a major actor in the domain of defence,” said Loïc Tribot La Spière, head of Paris-based think tank the Centre for Studies and Prospective Strategy.
Such a move will not only “rationalise and provide products at an adapted price, but will also allow them to better compete in Europe and the world”.
Thales, which specializes in electronics, said the two companies were aiming to strengthen competitiveness, “especially on international markets”.
Talks between Thales and Safran have been a perennial topic since 2007, but were resumed in earnest this year under Luc Vigneron, who took over as chairman and chief executive at Thales in 2009.
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