Publication: Business Report Date: 2005-12-15 Reporter: Laurence Frost Reporter:

France Announces Thales-DCN Tie-up

 

Publication 

Business Report
Date

2005-12-15

Reporter

 Laurence Frost

Web Link

www.busrep.co.za

 

French defence company Thales SA has agreed to acquire a 25 percent stake in state-owned warship maker DCN, the French government announced Thursday.

The long-awaited tie-up, seen as a step toward wider consolidation in European military shipbuilding, was announced by France's defence and finance ministers, Michele Alliot-Marie and Thierry Breton.

Under the terms of the deal, to be completed in mid-2006, DCN will also acquire Thales' naval assets including its stakes in their existing joint ventures, Armaris and MOPA2 - the unit established to build a second aircraft carrier for the French navy.

Besides the transfer of assets to DCN, Thales will pay an as-yet-undecided cash sum no more than €150-million (about R1,1-billion) for the DCN stake, which it has the option of increasing to 35 percent after two years.

The "declaration of intent" was signed Thursday by the CEOs of Thales and DCN, Denis Ranque and Jean-Marie Poimboeuf, as well as the two ministers.

The transaction values DCN at €2.8 billion (US$3.4-billion) and will have a positive impact on Thales' earnings per share in the first year, Ranque told reporters. Thales shares were 1.3 percent higher at €38.36 (US$46.03) in Paris trading.

The government had called repeatedly for a deal between DCN and Thales -in which it also holds a 31 percent stake.

Unlike the aerospace sector, concentrated around European Aeronautic Defence and Space Co. and Britain's BAE Systems PLC, the continent's warship building industry remains fragmented and inefficient.

Alliot-Marie told lawmakers on Wednesday that the deal would transform DCN into "a champion in its field, capable not only of surviving but of holding its own on the European and international market."

But striking workers staged demonstrations at DCN shipyards around the country on Thursday to protest what they see as the creeping privatisation of the shipbuilder.

"Contrary to what we are told, this will lead to the dismantling of public sector naval defence industries," the French Communist Party said in a statement, with "dangerous consequences for jobs and for national sovereignty."

The Communist-linked CGT, France's No. 2 trade union, is concerned that the Thales deal paves the way for a further tie-up with a German company - perhaps steelmaker and shipbuilder ThyssenKrupp AG.

Such a deal is touted by defence industry watchers as the logical next move toward a European naval equivalent to Franco-German EADS.

- Associated Press Writer Cecile Roux contributed to this report. - Sapa-AP

With acknowledgements to Laurence Frost and Business Report.