"Thales Australia has announced its plans to increase its stake in Australian defence contractor ADI Limited to 100 percent," the company, a wholly-owned subsidiary of the French parent, said in a statement posted on the ADI website.

Thales said the transaction was conditional on approval from Australia's Foreign Investment Review Board.

No figures were given for the ADI takeover bid, but the number is certain to run into the hundreds of millions of dollars.

The Australian newspaper said the United States would be concerned about a French-controlled company handling some of its sensitive military technology.

The US and Australian military cooperate closely and share technology, with "interoperability" between the two forces one of Canberra's stated goals when acquiring defence hardware.

The newspaper said a similar takeover proposal was scuttled five years ago because of security concerns.

Thales is 30 percent owned by the French government, which has questioned elements of Washington's "war on terror", while Australia is a strong US ally that has participated in the invasions of both Iraq and Afghanistan.

ADI has annual sales of 700 million dollars and employs 2,500 people.

It has a wide range of contracts with the Australian military providing munitions, minehunter ships, missile frigate upgrades, armoured personnel carriers and software for a fleet of Eurocopter Tiger attack helicopters.

Thales operates in more than 30 countries, has 60,000 staff and annual revenues of 10.3 billion euros (12.4 billion US).

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