By PIERRE TRAN Published: 10 May 2011 12:30
PARIS - Stock prices in Safran and Thales rose after the aerospace equipment and defense groups confirmed they are in talks on an exchange of business assets, following a newspaper interview with the French government's military procurement chief.
"Following the article published this morning in Les Echos newspaper, Thales confirms that discussions are currently being held with Safran," the electronics company said in a statement.
"These discussions are following on previous exchanges between the two companies, which are aiming at seeking to optimize their respective business portfolios so as to strengthen their competitiveness, especially on international markets," Thales said.
Safran stock rose 2.63 percent, or 0.69 euros, to 26.68 euros; Thales stock rose 1.25 percent, or 0.37 euros, to 30.08 euros.
Safran said the talks were aimed at boosting French competences.
"Safran believes there are obviously opportunities and means to optimize French defense industrial and technological capabilities," the company said in a statement.
"Safran is open to considering evolutions which enable each of the parties involved to develop in their fields of excellence, in the interest of their customers, notably their French customer, their shareholders and employees.
"In that spirit, Safran confirms that discussions with Thales on asset swaps have resumed," the company said.
It was too early to say whether the talks would lead to a business deal, and Safran would consider its strategic interests in developing aviation electronics in the discussions, the company said.
"We have clearly defined the parameters," the head of the Direction Générale de l'Armement procurement office, Laurent Collet-Billon, said in the May 10 interview with the Les Echos. The two companies and their bank advisers were working out the details, Collet-Billon said in the interview.
Talks between Safran and Thales broke down last year as the latter refused to hand over its aircraft electronics business, seen as a core competence in the electronics group.
The government froze small research and technology budgets to the two companies in a sign of displeasure, and to underscore the message that it would not fund an overlap of defense activities when public spending is being cut.
Last year's talks focused on an exchange of inertial navigation, optronics and aircraft electronics, the latter seen as crucial to Safran's ambitions to develop next-generation commercial aircraft.
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