DCN approves merger with Thales

The board of France?s state-owned naval shipyards DCN has approved a tie-up with defence electronics group Thales that will make it one of Europe?s three biggest shipbuilders.

“This project will allow the reinforcement of the French naval industry,” DCN said in a statement adding that it served “customers all over the world. Six members including the decisive vote of DCN chief executive Jean-Marie Poimboeuf backed the alliance, overruling six union representatives who voted against, a union source said. Government representatives on the board of the wholly state-owned group did not vote, the source added.

DCN manufactures warships and submarines and supplies defence computer systems and advanced technology. It counts the French navy as its main customer, but also supplies more than 40 navies across the world. Thales, formerly known as Thomson-CSF, is a supplier of electronics to the defence and security sectors. It is 31.3% owned by the French state.

The alliance, signed by the companies last week, is another significant step towards consolidation of European naval defence industries. However, DCN workers have protested seeing it as a move to privatize the company. Under the agreement, Thales agreed to transfer to DCN its naval shipyard activities and major shares in joint ventures by the two companies for building warships and aircraft carriers. In return, Thales is to take a 25.0% stake in DCN and make a cash payment of 100-150 million euros to the French state.

The transaction is expected to be completed in June next year and Economy and Finance Minister Thierry Breton has said that Thales might later increase its stake in DCN to 30-35%.