Headlines
Europe's new space merger explores the FOMO frontier
Published by Global Banking & Finance Review®
Posted on October 24, 2025
5 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 24, 2025
5 min readLast updated: January 21, 2026
Europe's leading satellite firms merge in a $7 billion deal to compete with SpaceX, aiming to strengthen the continent's position in the global space market.
By Tim Hepher, Mathieu Rosemain and Elvira Pollina
PARIS/LONDON (Reuters) -Driven to the brink by Elon Musk's SpaceX, Europe's biggest satellite firms are setting aside longtime rivalries in a do-or-die $7 billion merger that some insiders are already calling Project FOMO.
A riff on Project Bromo, the code name for talks that led to Thursday's deal between Airbus, Thales and Leonardo, their fear of missing out reflects a market dominated by SpaceX and its Starlink array as well as new mega-constellations in China.
"This kind of merger of the three biggest European space companies would have been unthinkable 10 years ago, but competition between Airbus and Thales is much less significant than competition between Europe, U.S. and China," said Caleb Henry, research director at advisory firm Quilty Space.
AIRBUS, THALES, LEONARDO COMBINE SATELLITE ACTIVITIES TO COMPETE GLOBALLY
The merger unites two joint ventures between Thales and Leonardo - Thales Alenia Space and Telespazio – with Airbus' satellite business as well as various smaller activities.
Airbus and Thales had tentatively explored co-operation in the past but received discouraging signals from the European Commission and political and industrial appetite for a deal was less pressing, two people involved in those talks said.
Since the last attempt more than five years ago, they have watched Europe's traditional market for geostationary satellites cut in half, as cheaper satellites flood low Earth orbit.
Russia's invasion of Ukraine and a security rift with the United States accelerated Europe's drive to support such sensitive assets as satellites, which increasingly overlap with defence.
A tipping point came with mounting losses on cutting-edge, reprogrammable satellites such as the Airbus OneSat programme.
Airbus CEO Guillaume Faury, tasked by the board with reforming defence and space strategy, sounded internal alarms in early 2024, telling staff that the losses were unacceptable.
By mid-2024, Airbus was hit by spiralling charges mainly related to OneSat and Thales was grappling with overcapacity, pushing them into landmark talks first reported by La Tribune.
NEGOTIATIONS ON VALUATIONS STILL PAINFUL
One person with direct knowledge of the decision, asking not to be named, said Airbus and two satellite ventures jointly owned by Thales and Leonardo seized the moment "to say we are suffering and have to compete globally, not against each other".
Another person involved in the talks said there had been "an overriding consensus that this is badly needed, for everybody".
The pragmatic agenda helped to contain political tensions that often go hand in hand with European aerospace, but that did not prevent painful negotiations on valuations, sources said.
"For once logic prevailed; it was get on with it or die," a separate person close to the talks told Reuters.
By contrast, Europe's fragmented defence industry is struggling to coordinate a response to growing threats.
And Europe's space launch sector is growing further apart with Italy peeling off from Arianespace, a partly Airbus-owned operator of Ariane rockets. The integration of Musk's rockets, satellites and Starlink services is credited with driving down costs but Europe's new combination does not include launchers.
Some analysts say the collaboration will fail to reverse the impact of years of prevarication that have left Europe ill-placed to compete, just as it embarks on the challenging task of building Europe's new secure satellite network, IRIS².
"I believe it comes far too late. The company will be tied up with consolidation for at least the next two years: the same period during which it is expected to design IRIS²," said satellite consultant Christian von der Ropp.
GERMANY'S OHB SIGNALS REGULATORY BATTLE
The head of smaller German satellite maker OHB meanwhile fired the first shot in a potential regulatory battle on Friday, telling Boersen-Zeitung: "This is a threat to us".
At a minimum, the deal could damage co-operation on contract bids between OHB and Thales, another senior source said.
To try to win support, the merger trio are urging European competition authorities to use a wider lens than usual when assessing market concentration, arguing that space is a global market, three people involved in the talks said.
They also argue the deal will boost European sovereignty.
The deal also leaves unanswered questions over capacity, with Europe hoping a bigger share of growing markets will prevent it having to cut jobs on top of 3,000 announced in 2024.
"I don't think you should be losing capacity. You need to preserve it because you're going to use it," Agency Partners analyst Nick Cunningham said.
The companies also put aside for now tricky topics of governance, other than to say it will be balanced.
How power is shared in practice will to some extent determine the success of the rare three-way merger to be finalised between now and 2027, industry analysts said.
(Additional reporting by Joey Roulette, Giulia Segreti and Amy-Jo Crowley; Editing by Barbara Lewis)
A merger is a business strategy where two companies combine to form a single entity, often to enhance market share, reduce competition, or achieve economies of scale.
Regulatory considerations involve the legal requirements and guidelines that companies must adhere to when conducting mergers and acquisitions to ensure compliance with laws.
Market concentration refers to the extent to which a small number of firms dominate total sales in a market, which can impact competition and consumer choices.
A joint venture is a business arrangement where two or more parties agree to pool their resources for a specific task, sharing profits, losses, and control.
A satellite business refers to companies involved in the design, manufacturing, and operation of satellites, which are used for communication, navigation, and observation.
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