European satellite firms in preliminary EU talks over merger plan -source

By Tim Hepher

PARIS (Reuters) - European aerospace companies Airbus, Thales and Leonardo have started preliminary talks with European Union antitrust regulators over a possible merger of their satellite businesses, a source familiar with the matter said on Friday. The source said the companies have begun discussions with EU competition authorities in what is called a "pre-notification phase", and that this marked a very early process that would not be expected to lead to any material outcome until "well into next year". A pre-notification refers to preliminary talks with regulators before a formal request for approval. A second source said the national governments who would be involved in this - France and Italy - were broadly aligned over the project, and that the European Commission, which opposed previous attempts to forge a single satellite maker, had the single most decisive say on whether the consolidation efforts would succeed. Airbus declined comment on an earlier report on this in French paper La Tribune, while a Thales spokesperson declined to comment and referred back to a recent statement by Thales CEO Patrice Caine that discussions on this were preliminary and non-binding. Leonardo declined to comment.

Last month, the CEO of Airbus had said he would be happy if satellite merger talks with Thales and Leonardo led to a venture like the MBDA European missile project, and he hoped EU antitrust regulators will take a looser stance than in the past.

Thales and Leonardo already cooperate in satellites through a venture that competes with Airbus for the bulk of European market.

The start of structured - if still preliminary - discussions with the EU executive is seen as the most tangible step towards a possible new European satellite venture in the face of competition from Elon Musk's Starlink, though industry officials have cautioned that a final deal remains some way off.

(Reporting by Tim Hepher; Editing by Dominique Patton/Sudip Kar-Gupta/Foo Yun Chee)