Major European Space Consolidation
Three of Europe’s largest aerospace and defense companies have reportedly reached a landmark agreement to combine their space operations into a new joint venture, according to an October 23 announcement. Airbus, Leonardo, and Thales signed a memorandum of understanding to merge significant portions of their space businesses, creating what analysts suggest could become Europe’s premier space technology champion.
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Structure and Scale of the New Venture
The unnamed joint venture will consolidate space assets from all three companies, creating an entity with approximately 25,000 employees across Europe. According to the announcement, the combination will include Airbus Defence and Space’s Space Systems and Space Digital businesses, Leonardo’s Space Division including its stakes in Telespazio and Thales Alenia Space, and Thales’ holdings in Thales Alenia Space, Telespazio, and optics specialist Thales SESO.
The companies indicated the venture will focus exclusively on satellite and space services, excluding launch vehicle operations such as Airbus’ stake in ArianeGroup. Based on projected 2024 results, the combined entity is expected to generate approximately €6.5 billion ($7.5 billion) in annual revenue with a backlog representing more than three years of projected sales.
Ownership and Strategic Rationale
Under the reported ownership structure, Airbus will hold 35% of the joint venture, while Leonardo and Thales will each control 32.5%. The companies stated the combination “will accelerate innovation in this strategic market” and create “a unified, integrated and resilient European space player” with sufficient scale to compete globally and expand in export markets.
In a joint statement, the CEOs of all three companies described the proposed venture as “a pivotal milestone for Europe’s space industry” that embodies their “shared vision to build a stronger and more competitive European presence in an increasingly dynamic global space market.”
Extended Negotiation Process
Sources indicate the companies have been working on the joint venture, internally known as Project Bromo, for over a year. During June’s Paris Air Show, executives hinted they were nearing a decision, with Leonardo CEO Roberto Cingolani stating at the time that he expected a “go/no-go decision” by the end of July after completing valuation assessments.
“I like to say that one plus one plus one should be bigger than three, otherwise we don’t do it,” Cingolani reportedly commented during the summer discussions. However, negotiations extended through the summer as the companies worked through complex valuation and governance issues.
By late July, Cingolani confirmed during an earnings call that due diligence was continuing with “our friends in Airbus and Thales,” adding “I think it’s still worth trying to make a giant of space operations in Europe.” Airbus CEO Guillaume Faury reaffirmed commitment to the project during the September Global Aerospace Summit, noting that due diligence and antitrust preparations were ongoing.
European Strategic Imperative
The consolidation addresses what industry analysts have long identified as fragmentation in Europe’s space sector. During the Paris Air Show, Alain Fauré, head of space systems at Airbus Defence and Space, noted that “in Europe, if we step back, there is a lot of fragmentation in terms of projects, fragmentation in terms of players as well.” He suggested the combination “can have the strengths of the three companies.”
The companies emphasized that the partnership aligns with European government ambitions to strengthen industrial and technological assets, ensuring what they describe as “Europe’s autonomy across the strategic space domain and its many applications.”
Regulatory Timeline and Next Steps
According to the announcement, the joint venture is expected to begin operations in 2027, “subject to customary conditions including regulatory clearances.” Executives had previously indicated that European antitrust approvals could require up to two years to obtain, suggesting the regulatory review process will be extensive given the scale of the combination.
The creation of this joint venture represents one of the most significant consolidations in the European space industry in recent years and positions the combined entity to compete more effectively against established U.S. space companies in the global market.
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References
- http://en.wikipedia.org/wiki/Thales_Group
- http://en.wikipedia.org/wiki/Leonardo_S.p.A.
- http://en.wikipedia.org/wiki/Airbus
- http://en.wikipedia.org/wiki/Joint_venture
- http://en.wikipedia.org/wiki/Telespazio
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