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.
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.