Key points
- Talks with Thales and Leonardo SpA are at an exploratory stage
- Thales Alenia venture with Leonardo had revenue of about $2.26 billion in 2023
- Italy is in talks with SpaceX on a €1.5 billion ($1.6 billion) deal
ISLAMABAD: Airbus SE has hired Goldman Sachs Group Inc for advice on an effort to forge a new European space and satellite company that can better compete with Elon Musk’s dominant SpaceX, according to people familiar with the matter, Bloomberg reported.
According to Bloomberg, the talks to create a space and satellite business with French aerospace company Thales and Italy’s Leonardo SpA are at an exploratory stage and its full portfolio of services hasn’t been set, the people said, asking not to be identified because discussions are confidential.
Rome-based Leonardo has hired Bank of America Inc for the plan, which has been dubbed Project Bromo, some of the people said.
Paris-based Thales is also speaking with advisers, the people said.
The two companies already have joint ventures on products for satellites and space telecommunications.
Hiring leading M&A advisors represents a concrete step to formalize long-discussed plans for a such a venture.
The firms are weighing issues such as cost, complexity, regulatory obstacles, antitrust implications and also the possibilities for bringing various civil and military contracts under such a transaction, the people said.
No comments
Representatives for Airbus, Leonardo, Goldman and BofA declined to comment.
Thales reiterated that early discussions have taken place, without commenting on advisers.
The move to bring in top M&A advisory firms is further evidence of the companies’ attempt to overcome political and financial hurdles to forming a European champion.
SpaceX has established itself as the industry’s preeminent rocket-launch provider, lofting satellites, cargo and people to space for NASA, the Pentagon and commercial partners.
Most advanced satellite network
Its internet-from-space unit Starlink operates the largest and most advanced satellite network in low-Earth orbit. European firms including Airbus have swallowed significant losses trying to keep up.
The urgency has increased since the reelection of US President Donald Trump, who has put Musk — the SpaceX founder and Tesla Inc chief who was the largest donor to his election effort — in charge of cutting the federal budget and modernising information technology.
European Union leaders are meeting on Monday in Brussels for a retreat to discuss defense spending in the context of Russia’s ongoing war against Ukraine and Trump’s demands that the bloc spend more on defense.
Still in flux
Details of the three-way venture are still in flux, and antitrust considerations are likely to shape the structure of any deal, the people said. Leonardo Chief Executive Officer Roberto Cingolani said on Jan. 28 that he met with Airbus counterpart Guillaume Faury to discuss European collaboration and that progress had been made on a new alliance on space and satellites.
La Tribune reported in mid-2024 on early talks to create a joint space company. Since then executives have discussed creating a venture modeled on missile company MBDA.
Airbus CEO Faury said in September that European defense and space companies need consolidation to better compete with major global powers.
Europe’s aerospace and defense leaders have long called for consolidation to funnel resources on expensive projects like warplanes. Airbus itself, cobbled together decades ago from manufacturers in several countries, is a primary example of how it can work.
In space, US firms like SpaceX are disrupting competition for rocket launches and satellite communications. Meanwhile in defense, Europe has competing programs for advanced fighter jets.
Europe needs scale in both areas in order to compete with US firms, Faury said at the time.
Cost cutting
Airbus in October said it would eliminate as many as 2,500 positions at its defense and space division as the European aircraft manufacturer seeks to cut costs in a business that’s consistently racked up accounting charges and suffered from stiff competition.
Faury launched a review of Airbus’s space unit in July after it racked up $1 billion in losses in the first half of 2024.
Calls for greater collaboration in space and defense in Europe have grown over the past year. Large system integrators such Airbus and Thales Alenia Space SAS are losing money on large commercial satellite projects, and profitability must be re-established as a matter of urgency, Josef Aschbacher, the European Space Agency’s director general, said in May.
Thales aims to restore profitability in the space sector, Chief Financial Officer Pascal Bouchiat said in December. The French company’s Thales Alenia venture with Leonardo had revenue of about 2.2 billion euros ($2.26 billion) in 2023, according to the website. They also co-own the Telespazio satellite-services venture which had €700 million in revenue in 2023.
Musk’s companies are also making inroads in Europe. Italy is in talks with SpaceX on a €1.5 billion ($1.6 billion) deal for encrypted communications systems, which would be the largest such project in Europe, according to Bloomberg.
