By Tim Hepher and Giulia Segreti
PARIS/ROME (Reuters) -The board of Italy’s Leonardo held a crucial meeting on Tuesday to review a tentative deal to forge a new European satellite manufacturer with its existing partner Thales and rival Airbus, people familiar with the matter said.
Barring a last-minute setback, the three companies aim to announce as early as Wednesday that they intend to press ahead with plans to pool loss-making activities into a new venture to fend off competitors led by Elon Musk, the people said.
However, after more than a year of tricky talks over the balance of power, valuations, antitrust and most recently a political crisis in France, signs of an announcement before markets open were looking more fragile, two sources added.
None of the companies agreed to comment.
Reuters reported on Monday that the three companies had agreed the framework of a deal, subject to board and regulatory approvals, with further detailed steps to be implemented later.
EUROPEAN SPACE FIRMS FACE SPACEX CHALLENGE
Once seen as pioneers of commercial space, Europe’s top satellite firms – Airbus and a pair of ventures controlled by Leonardo and France’s Thales – have been dwarfed by tech rivals led by Musk’s SpaceX and a deeper shift in the market towards cheap satellites in low Earth orbit.
The talks mark the latest attempt to tie together fragmented European assets and draw inspiration from a decision by France, Italy and Britain to set up the MBDA missiles venture in 2001.
Industry watchers said the fine print of a deal would be closely scrutinised, particularly the extent to which the three parties have agreed detailed governance arrangements including roles of chair, CEO and CFO – issues that have previously caused friction in European aerospace mergers such as Airbus itself.
Leonardo faces pressure to defend Italy’s interests in line with the nationalist agenda of Prime Minister Giorgia Meloni, but France’s Thales, whose CEO Patrice Caine is among the deal’s architects, may effectively drive the new venture, sources said.
France-based Airbus is widely seen as the most willing of the three to reduce its exposure to space after crippling losses in its space systems business and roughly 2,000 job cuts.
Under the deal, the trio will provide their assets to a newly-created holding company, resulting in slightly unequal stakes as Airbus contributes the largest slice. Once the deal closes, various balancing payments will ensure a politically-acceptable equal three-way split depending on prevailing values.
Il Giornale newspaper said Leonardo would own a third of the venture. Il Sole 24 Ore said Airbus would initially control 35%, with the rest shared equally between Leonardo and Thales.
Shares of industrial work and R&D will also be widely scrutinised, notably by unions and politicians. France’s Force Ouvriere union said last month that merely combining assets was no replacement for a coordinated European space strategy.
Previous attempts to merge satellite activities in the past decade foundered on antitrust concerns and national rivalries.
Airbus and Leonardo have urged EU regulators to take a broader view on the global competitive landscape when assessing the new conglomerate, rather than focusing on Europe alone.
The deal to combine Europe’s two largest players may also face objections from smaller German satellite maker OHB, industry sources said. OHB had no immediate comment.
(Reporting by Giulia Segreti in Rome, Tim Hepher in Paris. Editing by Louise Heavens and Mark Potter)
