GEC set to combine Marconi with Thomson-CSF

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GEC yesterday positioned itself to combine its Marconi defence electronics business with that of Thomson-CSF of France whichever of the two government-approved bidders succeeds in taking over the company.

Lord Prior, chairman of GEC, said that it had signed memoranda of understanding with both the Alcatel Alsthom-Dassault consortium and the British Aerospace- backed Lagardere group, the two candidates selected to bid for Thomson.

The move follows last month's decision by the French government to veto a direct takeover bid for Thomson-CSF by GEC on grounds of "national security". It was the second time in four months the French had rejected a foreign bid.

GEC already has joint ventures with the groups bidding for Thomson-CSF. It owns a 50 per cent stake in GEC Alsthom, the Anglo-French power engineering and transport company, and has a space joint venture with Lagardere.

Separately, it was confirmed that BAe will fund up to pounds 300m of Lagardere's bid. BAe also has a joint venture with Lagardere's Matra division in missiles.

Marconi and Thomson-CSF are Europe's two biggest defence electronics companies and together would form a combination capable of competing on a more equal footing with US giants such as Lockheed-Martin. Lord Prior said the agreements signed yesterday with the two consortia left it well positioned to take part in any reorganisation of Europe's electronics defence industry.

GEC would be prepared to put a large part of Marconi's operations into a combined company although it would keep the naval warship business, which owns VSEL in Barrow and the Yarrow yard on the Clyde separate.

The French government was due to select the winning bidder by early July but the timetable may have been affected by the decision to call an election.