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. Last Updated: 07/27/2016

France Backs Thomson-Marconi Deal

LONDON -- French defense electronics group Thomson-CSF has won the backing of the French government to pursue a merger with Marconi Electronics Systems, a unit of Britain's General Electric Co., the Financial Times reported Monday.

According to Dennis Ranque, chairman of Thomson-CSF, the government has agreed to reduce its 40 percent shareholding in the company to below 10 percent if necessary to complete the deal.

"I have had successful discussions with the French government that make me fully convinced that if such a deal is presented to it conditional upon a significantly reduced government holding, there will be no problem on its part," the newspaper quoted him as saying.

A spokesman at the French Prime Minister's office declined to comment on the report and officials at Thomson-CSF were not immediately available.

Thomson-CSF and Marconi have attempted to merge in the past but a link-up has been frustrated by the French government's opposition to Thomson-CSF's loss of independence.

GEC last week announced its intention to split its defense and aerospace businesses from other units in preparation for a merger move.

A link between its Marconi arm and Thomson-CSF is just one option. Industry sources say GEC is also looking at a tie-up with British Aerospace - which could also include DaimlerChrysler Aerospace - or with U.S. giant Lockheed Martin.

Speculation has been rife about Europe's aerospace industry, which is under pressure to consolidate to compete against U.S. behemoths such as Boeing and Lockheed Martin.

Marconi and Thomson-CSF are Europe's two largest defense electronics firms, working in complementary fields such as missiles, sonar, radar and countermeasures. A merger would enable to them to pool resources, including research and development expenditure.