Thomson Deal Gives Instant Boost To Bae

The rise in BAes share price up 19p to 11.32 1 /2 was rooted in the belief that its close relationship with Lagardere will provide a platform for a deeper partnership.

GEC led by George Simpson, a former BAe director has an enormous power engineering joint venture with rival bidder Alcatel Alsthom and was expected to have forged closer links with Thomson, had Alcatel won.

Yet the Anglo-French chess game of European arms industry consolidation is still only half a dozen moves beyond the opening gambit. The true impact of the decision, in effect, to merge the defence electronics business Thomson-CSF with Lagarderes Matra weapons subsidiary will emerge but slowly.

The new entity will have a large chunk of business in three Anglo-French joint ventures. Of these, the newest and biggest is Matra BAe Dynamics (MBD), Europes largest missile maker.