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Report: Aerospace Firms Near Merger

July 24, 1999

BERLIN (AP) _ DaimlerChrysler Aerospace and France’s Aerospatiale Matra are close to agreement on a merger deal that would create the world’s biggest aerospace company after Boeing, a newsmagazine reported Saturday.

Der Spiegel said the plans to fuse the two companies are already on the desk of French President Jacques Chirac, who must approve any deal involving the aerospace and defense group Aerospatiale Matra, which is 48 percent state-owned.

The newsmagazine said the deal was worked out by DaimlerChrysler chairman Juergen Schrempp and Jean Luc Legardere, chairman of Aerospatiale Matra’s supervisory board. The report did not cite sources.

A spokesman for DaimlerChrysler Aerospace, Rainer Ohler, would neither confirm nor deny the report. ``Everybody’s talking with everybody,″ he said.

Officials at Aerospatiale Matra in Paris declined to comment.

Der Spiegel’s report is the latest in a flurry of consolidation announcements from Europe’s aerospace and defense industry, which has said it hopes to better compete against U.S. giants like Boeing and Lockheed Martin.

European companies already cooperate in building Airbus commercial planes and Eurofighter and Tornado military jets, but industry insiders fear that unless they pool their skills, finances and research more closely, they will be picked off by U.S. firms keen to expand into European markets.

Just last month, DaimlerChrysler Aerospace, known as Dasa, signed a memo of understanding with Spain’s Construcciones Aeronauticas SA to merge into Europe’s first multinational aerospace company, beating out Aerospatiale Matra and other European firms.

Dasa earlier this month announced a joint venture in space technology with Aerospatiale Matra and the Marconi division of Britain’s General Electric Co. The Alenia Spazio division of Italy’s Finmeccanica is expected to join that venture, called astrium, later.

In both deals, Dasa officials said the aim was to strengthen competitiveness and contribute to ``European industrial integration.″

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