The deal follows last month's link-up between the UK defence group British Aerospace and General Electric's Marconi division. Analysts predicted that the new French group would seek out European partners.
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THE FRENCH government said it had agreed terms for a merger between the state-owned aerospace company Aerospatiale and the Matra defence unit of the Lagardere group, in a deal which will create a French powerhouse in the defence industry. Lagardere will pay up to Ffr2bn (pounds 220m) for 33 per cent of the Aerospatiale-Matra group. The French state's holding in the new group will fall below 50 per cent after a flotation later this year.