Thomson-CSF, Racal are a powerful new force in electronics

Last week, Thomson-CSF announced completion of its acquisition of the British company Racal Electronics plc, an important milestone for Thomson-CSF, since it is the most important acquisition so far in their drive to become a 'multi-domestic' company, a policy which Thomson is pursuing vigorously, having an 'indigenous' company in each of its markets.

Combined global revenues of Thomson-CSF Racal are close to 8 billion euros. The new company employs 64,500 people world-wide; 50% are based outside France with 15,000 in the UK, effectively doubling the Group's size in the United Kingdom and boosting UK turnover to 2 billion euros. The acquisition will strengthen systems capabilities across the whole spectrum of defence electronics and add commercial businesses entirely complementary to those of Thomson-CS F.

Thomson-CSF expects the acquisition to deliver substantial synergies, both industrially and financially. The addition of Racal's expertise in defence, industrial electronics and transportation services reinforces Thomson-CSF's position in Europe and complements its range of products, systems and services in three core markets: defence, aerospace, and information technology and services.

The integration of Racal makes Thomson-CSF a major global player in tri-service military communications. The Group serves the aerospace community (air traffic management, simulation, and avionics) and has a growing presence in high-growth markets such as mobile telephony, electronic transactions and e-business.

Racal's commercial electronics businesses will be a major part of the enlarged group's future. By combining both companies' industrial electronics and information services activities, Thomson-CSF will be a player in the high-growth areas of security and payment systems, survey and positioning systems, instrumentation, recording, fleet management and transportation services.

For several years, Thomson-CSF has pursued a policy of external growth and implemented a unique model of multi-domestic development to emerge as a global player with the local industry presence that each market requires.

Recently, the Group has acquired South Africa's African Defence Systems; been selected as the industrial partner in the privatisation of ADI, Australia's leading defence contractor; and acquired an interest in Avimo, a global optronics group mainly based in the United Kingdom and Singapore. It has also acquired an interest in Embraer, Brazil's major player in the civil and military aviation markets, acquired US-based Sextant In-Flight Systems, and signed an agreement for the acquisition of 50% of the defence business of Samsung Electronics, the leading Korean defence contractor. The Group has purchased Bombardier's 50% stake in Northern Ireland's Shorts Missiles Systems, making Thomson-CSF sole owner, and bought the remaining 10% of UK-based Pilkington Optronics.

These successes, as well as the major NATO contract awarded last year to Thomson-CSF's air defence joint venture with Raytheon, are examples of the group's consistent long-term strategy to develop its business by combining a global dimension with strong local presence in multiple domestic markets. The acquisition of Racal adds impetus to this strategy, and boosts Thomson-CSF's leading position as a global supplier of defence, commercial and industrial electronics and systems.

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