GEC signs up for $3bn Euro space merger

GEC YESTERDAY took time out from negotiating the restructuring of the European defence industry to sign a merger creating the first pan- European space group.

The deal, bringing together the space operations of four of Europe's largest groups, creates a company with 11,000 employees and annual revenues of more than $3bn (pounds 1.8bn).

It will be by far the largest space company in Europe, capable of taking on US players such as Lockheed Martin and Boeing.

GEC is participating through Matra Marconi Space, its joint venture with the French aerospace group Lagardere. Dasa, DaimlerChrysler's aerospace division, and Italy's Finmeccanica will also be contributing their space operations to the new company. The companies did not say how holdings in the new company would be divided between the four owners.

The deal, expected to be completed next year, marks the end of two years of negotiations aimed at matching the consolidation in the US aerospace and defence industry. However, it excludes Alcatel Space, a joint venture including the French defence electronics group Thomson-CSF.

The new company will be one of only two in the world capable of offering a complete range of space operations.

Armand Carlier, now chief executive of Matra Marconi Space, will become the first chairman of the board of directors of the new company. Each participant will appoint two members to the board.

In a joint statement, GEC and Lagardere said the new company aimed to capture a major share of the growing market for space-based commercial telecoms systems.

GEC and Finmeccanica yesterday also formalised their joint venture in missile systems and air traffic control, Alenia Marconi Systems, which will have estimated sales of pounds 1bn.