Banned by the French government from bidding direct for its 58% stake in defense-electronics giant Thomson-CSF, the UK’s GEC Plc has signed agreements with the two remaining bidders to hold further discussion in the future. GEC has produced signed memoranda of understanding between itself and the two remaining bidders, Alcatel Alsthom SA and Groupe Lagardere. GEC were disallowed from bidding for national security reasons the French ministry said. The new memoranda ensure that whichever of the two French companies wins the bid, it will hold talks with GEC about links between Thomson-CSF and GEC-Marconi, GEC’s own defense subsidiary. Thomson-CSF is currently Europe’s biggest defense-electronics company, but the decision by the French government to sell its controlling stake is part of a long term initiative to re-structure the fragmented European defense industry. So much consolidation has occurred within the rival US industry that mergers are overdue in Europe, otherwise the Europeans will not have sufficient mass to enable them to compete. British Aerospace Plc and the German Daimler-Benz AG are also trying to get in on the act, and have put their combined weight behind the Lagadere bid, but nothing will be decided until after the June 1 final round of the French parliamentary elections.