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French state pressures Thales, Safran on consolidation

Atlantic Marine looks to new future in BAE
Arlington, Va. (UPI) Jul 16, 2010 - Shipbuilder and repairer Atlantic Marine looks set to a new future under BAE Systems' North American operations after the aerospace giant completed its acquisition of the shipyards for a cash price of $352 million. "BAE Systems' desire to acquire Atlantic Marine is solely based on their excellent record of performance in the shipbuilding and repair industry over the past several years," BAE spokeswoman Stephanie Moncada told United Press International. The Atlantic Marine operations at Mayport and Jacksonville, Fla.; Moss Point, Miss.; and Mobile, Ala., employ about 1,000 people and are engaged with both maintenance and construction.

The diverse range of Atlantic Marine operations in the past have entailed conversion, overhaul and various marine fabrication services for both military and non-military uses. With the facilities' acquisition by BAE the entire set-up acquired will now be known as BAE Systems Southeast Shipyards, a company news release said. The process of the acquisition was begun earlier this year and set in motion various U.S. regulatory approvals. "We are proud to welcome the highly skilled men and women of Atlantic Marine

to BAE Systems," said Bill Clifford, president of BAE Systems Ship Repair. "Together, we'll continue to provide cost-effective solutions to meet our customers' evolving requirements." The newly renamed BAE Systems Southeast Shipyards will complement the company's existing ship repair, maintenance, and modernization capabilities to further serve the U.S. Navy and other maritime customers, Clifford said. The acquisition is consistent with BAE Systems' strategy to address anticipated growth in readiness and sustainment activity within its home markets.

The addition of BAE Systems Southeast Shipyards will enhance the company's ability to support current and future U.S. Navy home-porting strategies and broaden its customer base, the company said. "Repair, maintenance and conversion work makes up the majority of BAE Systems Southeast Shipyards' workload," Moncada told UPI. "We endeavor to maintain a healthy amount of new construction as opportunities permit," she said, adding that repair and maintenance jobs would continue to form the bulk of the shipyards' workload. "BAE Systems Southeast Shipyards diligently strives to maintain a full workload of both government and commercial work. Over the past few years, the split between the two has been roughly half and half," Moncada added.
by Staff Writers
Paris (AFP) July 16, 2010
The French state has frozen orders worth 300 million euros placed with defence groups Thales and Safran, according to sources in the defence ministry, which is pressing the companies to consolidate some of their activities.

A ministry source said the decision did not amount to a cancellation and concerned "commitments to order" material this year.

The government owns stakes in both Thales and Safran. The decision to suspend orders is seen as increased state pressure on the groups to resume discussions, which ended in May, on combining some of their operations.

At the request of the government, Thales and Safran, active in aeronautics, defence and security, had been in talks for months on ending the parallel development of certain technologies.

earlier related report
Zodiac rejects Safran tie-up
Paris (UPI) Jul 16, 2010 - A leading French aircraft equipment maker has snubbed an unsolicited tie-up bid from a state-controlled aerospace engineering company, Safran.

The flat rejection of the purported $3 billion deal by Zodiac aerospace effectively forces the French-based aero-engine and aircraft equipment maker, Safran, to look elsewhere for external growth.

In recent weeks, Safran's chief executive officer, Jean-Paul Herteman, had addressed a letter proposing that the two companies examine "the merits of bringing their activities together," according to a company statement. The proposal was based on "the search for economies of scale, the trend towards electric aircraft and the need for the emergence of a strong national French champion," it said.

Still, Zodiac's board of administrators turned down the offer unanimously.

"The company has no need of a partner," said Zodiac Chairman Olovier Zarrouati. "And if it did, there would be lots of better candidates than Safran." Board members indicated that they saw no synergies in a merger, in either strategic or commercial form.

Despite the public rejection, French media indicated that Safran was maintaining pressure on Zodiac, which makes aircraft systems and cabin interiors.

Safran co-owns the world's largest jet engine company together with General Electric. A potential merger, experts say, would forge a company with annual sales estimated at $12 billion.

In fact, news of the tense standoff between Zodiac and Safran shot the former's shares up by nearly 7 percent on Friday.

Safran has ruled out a hostile takeover move of the smaller company.

In 2007, Safran and Thales, another state-controlled aerospace and defense group, held abortive merger talks. It remained unclear whether there were attempts to revive the proposed merger.

DefenseNews reported that the French government was keen to see a merger of "onboard electronics, optronics and inertial navigation businesses held in Safran's Sagem defense division and those of Thales."

Thales management, however, has refused to relinquish control of the onboard electronics, which is sees as key to the group.

The French government owns about 30 percent of Safran.

Since the bid was made public, analysts have been perplexed as to why Safran, which has been repeatedly snubbed by Zodiac, would make a formal tie-up bid. Still, officials in the company say that with strong growth expected and with the company debt-free, it is looking for way to expand its growth.

Analysts also cite the need for backing from a key group of Zodiac's family shareholders as crucial to any deal.

Zodiac's operation dates back to 1896 when it set off as an aeronautical firm making warships and airplanes. The company says it first introduced the concept of the inflatable boat in the 1930s. Sales rocketed during World War II.

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London (UPI) Jul 16, 2010
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