Four European defence groups have confirmed they are to merge their satellite activities as part of a European effort to consolidate aerospace companies,enabling them to compete better with their giant American rivals.

The merger -- which is expected to take place next year pending the approval of the European Union -- was agreed by the French company, Lagardere, Daimler-Chrysler Aerospace of Germany, the General Electric Company of Britain and Finmeccanica of Italy.

The new company will have an estimated annual turnover of around three-billion dollars .