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Monday, October 12, 1998 Published at 08:16 GMT 09:16 UK

Business: The Company File

BAe and Dasa 'set to merge'

BAe's Tornado aircraft may become part-German owned

Defence aviation manufacturers British Aerospace and Germany's Dasa are reportedly set to merge.

The Financial Times says BAe and Dasa - Daimler-Benz Aerospace - will merge early next year forming a holding company structured to allow other companies to join later.

The companies have been part of negotiations to form an integrated European defence aircraft group along with French company Aerospatiale and others in the region.

Major merger delays

However, the privatisation of Aerospatiale by the French government has been the sticking point up to now in plans for a major merger.

Other parties are unhappy that the French Government wants to retain 48% of Aerospatiale and have been applying pressure for full privatisation.

It now appears BAe and Dasa have given up hope of a big one-step merger of the Continent's defence aircraft makers and will take the first step alone.

[ image: BAe and Dasa still looking to assemble European aircraft giant]
BAe and Dasa still looking to assemble European aircraft giant
But the two companies are said to be anxious to avoid alienating other potential partners and want to create the new entity in a way that allows easy entry for other companies.

The Financial Times said the new merged company would be registered in the Netherlands and would combine the businesses of BAe and Dasa with an Aerospatiale representative to be invited onto the board of directors.

Governments and companies in the UK, Germany, France, Spain, Italy and Sweden have been negotiating for more than a year over the creation of a pan-European company to take on the US's Lockheed and Boeing defence giants.

The report sawb shares in British Aerospace jump 31p to 387p in early trade.

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