Italy's Finmeccanica and France's Alcatel agreed today to combine their space activities in two satellite-related joint ventures.
The firms said they signed a memorandum of understanding to set up two space industry joint ventures, creating a European leader in the satellite sector, ahead of Astrium, the space division of Airbus parent EADS.
Finmeccanica and Alcatel have been in talks for months on a deal that comes in response to a sharp decline in demand for commercial satellite launches in recent years.
Leading European space firms such as Astrium and Alcatel Space have slashed jobs in response to the declining market and pushed European governments to commit more funds to programmes with military and scientific applications.
One joint venture, Alcatel Alenia Space - to be controlled 67 per cent by Alcatel and 33 per cent by Finmeccanica - will focus on manufacturing space systems.
The venture, to be based in France, will have about 7,200 employees and expected revenues of €1.8 billion ($2.2 billion) in 2004.
The smaller joint venture, with expected revenues of €350 million and 1,400 employees, will be 67-per cent controlled by Finmeccanica and 33 per cent by Alcatel. Based in Italy, it will concentrate on satellite-related services.
The deal is expected to be finalised by the end of the year, the companies said.