Rivals for Thomson-CSF ready to show their hands

The two rival bidders for Thomson-CSF the state owned French defence group are expected to submit their final bids tomorrow. Alcatel Alsthom, the electronics and telecommunications group, is launching a joint bid with the privately-owned Dassault Industries.

Other companies are also planning joint deals with the winning side. Daimler-Benz Aerospace has confirmed that it has been talking to both Alcatel Alsthom and Lagardere.

GEC, which was barred by the French government from bidding directly for Thomson on the grounds it would be against French security interests for a foreign company to own more than 50 per cent of the business, has also talked to both sides.

Lagardere already has a satellite joint venture with GEC through Matra Marconi Space and a missile venture with BAe, Matra-BAe Dynamics. Alcatel is a partner with GEC in GEC Alsthom, a specialist joint venture in power engineering.

These secondary deals are expected to influence the outcome of the bids. The French government favours creating a strong group around Thomson CSF with wide European links. Franck Borotra, Industry Minister, said yesterday, "the prospects for restructuring the defence industry in a European context will be taken into account by the government".

But neither Alcatel nor Lagardere is willing to bid for Thomson CSF at any price, sources said yesterday. The bids will go ahead on schedule and a decision is expected by 30 June, in spite of the parliamentary elections in France, which have delayed the partial privatisation of France Telecom by a month.