European Satellite Manufacturers Negotiate Business Merger

European aerospace group Airbus, French Thales, and Italian Leonardo are in preliminary discussions with European regulators about a possible merger of their satellite businesses, said an informed source.

The companies can request preliminary talks with the European Commission regarding a potential merger, which, according to EU regulations, are informal and confidential and may yield concrete results only in the next year. The discussions are merely the initial phase of the process and precede a formal request to the European Commission for approval of the merger.

France and Italy are largely in agreement with the project, another source said on Friday, and the final decision will be made by the European Commission. Brussels has halted previous proposals for the formation of a European satellite manufacturer, Reuters notes.

Airbus declined to comment on a report by the French newspaper La Tribune regarding the planned merger, and a spokesperson for French Thales also declined to comment, referring Reuters to a recent statement by CEO Patrice Caine that the talks are preliminary and non-binding. Leonardo did not wish to comment on the source’s claims.

In February, Airbus CEO Guillaume Faury stated that he hopes for a successful conclusion to the discussions between Thales and Leonardo regarding the merger of their satellite businesses and collaboration modeled after the joint European missile manufacturing project MBDA. The joint owners of MBDA are Airbus, British BAE Systems, and Leonardo. The company was established in 2001 to enter the global top tier of missile manufacturers after more than a decade of military budget reductions across Europe.

– We are exploring various scenarios… Europe has technologies, even better (than the US), but we do not have the production scales we need to be competitive – Faury said at the end of February in Toulouse during a conversation with journalists.

– We really hope that European regulators will consider the proposal from a different perspective than before… this is how things look in the consolidation process that could evoke comparisons to a monopoly in Europe – he added.

Thales and Leonardo are already collaborating in the satellite business through a project that competes with Airbus for the largest share of the European market.

Many consider the preliminary talks of the group of companies with the European Commission as the most tangible step towards a possible new European project that would compete with Starlink Elon Musk.

However, industry leaders warn that a final agreement will not be reached anytime soon, Reuters notes.