The merger task force of the European Commission has finally approved the creation of Astrium, initially in the form of a merger of the space activities of Matra Marconi Space (MMS) and DaimlerChrysler Aerospace AG.

It will probably be necessary to establish local Astrium operating companies in France, Germany and the UK, much as is currently the case with MMS. They would be “managed” by a holding company located in the most tax-favourable environment. Matra Marconi Space NV, the present holding company, is located in The Netherlands.

Later, the space activities of Spain’s CASA may well be brought into Astrium, and also those of Alenia Spazio, part of the Italian Finmec-canica group, but these two deals are for the future. DaimlerChrysler is in the process of absorbing the whole of CASA, a move announced at last June’s Paris Air Show. The future of the whole of Alenia is a matter of current negotiation; but a Memorandum of Understand-ing on the future of its space activities (ie, its absorption into Astrium) dates back to late 1998. Since then, Alenia Spazio has been established – or rather re-established – as a separate company to facilitate the Astrium merger.

According to MMS staffers in the UK, the formal announcement of the creation of Astrium as a going concern is anticipated for May this year. Since the original Astrium announcement in May 1997, Matra and Aerospatiale have merged, with a majority of its shares now in private hands. Prior to this, Aerospatiale divested its satellite building activities, which were transferred to Alcatel and Thomson-CSF. The Cannes satellite plant now trades under the name of Alcatel Space.

A “super merger” of the whole of Aerospatiale Matra with DaimlerChrysler (including CASA) into a conglomerate called the European Aeronautic Defence and Space (EADS) company is also well on the way, but the EC watchdogs have said that they also want more detailed information on this.

Unlike EADS – which was created because British Aerospace preferred to do a deal with the former GEC than merge with DaimlerChrysler (Dasa) – Astrium will have a British ownership share of 25 per cent. The current MMS is owned equally by BAe Systems and Aerospatiale Matra. The combined Franco-British share of Astrium will be 50 per cent, with the rest going to Dasa.

Astrium is being referred to as a “satellite company”. Although satellites are its most profitable business (except for last year, when Aerospatiale Matra’s solar array problems had a 62.6 per cent negative impact on the group’s operating income), its activities will also include “space infrastructures” – essentially Space Station elements. It is believed that Alcatel’s bid for Alenia Spazio failed because the French company was only interested in Alenia’s satellite activities.

Not included in Astrium will be Aerospatiale Matra Lanceurs, which covers Arianespace and Starsem related activities. This is believed to be because this group is also responsible for France’s strategic nuclear missiles. It may prove necessary to spin these off into a separate state-owned company (as they were originally) before EADS can be constituted.

There are some conditions to approval of the Astrium deal. One relates to momentum wheels used in satellite control. Teldix of Germany, which also makes these wheels, put in an objection that UK production of similar items could have a negative competitive effect. MMS has agreed to sell this activity.

The other condition is related to on-station propulsion systems, again for satellite control, for Spacebus 3000 satellites. These are produced by Dasa, originally for Aerospatiale’s satellite plant, which now belongs to Alcatel. When it was sold in 1998, it was agreed that the existing arrangement could continue until 2003. But Alcatel felt that Dasa’s membership of Astrium would give it a dominant position. The solution will be for the Friedrichshafen plant of Dasa to continue to perform the work, but the unit responsible will be sold, probably to Alcatel.