Earlier Thursday, the two companies announced a morning news conference, without giving further details.

According to the weekly magazine Le Nouvel Observateur, the merger plan has been presented to the economy ministry. The state owns 66.22 percent of Snecma.

The report said Sagem would like it to be carried out at parity, despite the fact Snecma is more than twice as big, with 2003 sales of 6.431 billion euros (8.189 billion dollars) against Sagem's 3.18 billion euros.

Sagem chairman Gregoire Olivier said in the media last week that in the defence area, his company focuses on electronic systems and it had no ambition to become a more general supplier.

The company had no desire to be bolted on to a "large group," he added.

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