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Lockheed Martin Corp’s $7.19bn acquisition of Northrop Grumman Corp, the latest major consolidation of the US defense industry which took place at the end of last week, puts even more pressure on the European defense business to end its squabbles and forge its own partnerships. Thomson CSF, with a $6.3bn turnover, is currently Europe’s largest defense and electronics group, but it is dwarfed by the new US groupings. Turnover for the combined Lockheed-Northrop will be around $37bn. The combined Boeing Co and McDonnell Douglas Corp’s merger is due to be completed by August 1, and Raytheon Co is in the process of eating both Hughes Electronics Corp and the defense businesses of Texas Instruments Inc. But in Europe, Thomson, along with the likes of GEC Plc, British Aerospace Plc, Alcatel Alsthom SA, Daimler Benz Aerospace AG, Siemens Plessey and Groupe Largadere, all continue to maneuver around each other inconclusively. A few smaller US firms, such as Litton Industries Inc, General Dynamics Corp and ITT Industries Inc, are also targets for further consolidation. Lockheed, which makes the F-16 Falcon jet fighter and Trident II submarine, also has a big business in launching communications satellites for the likes of Motorola Inc, although it has recently spun out its non-core communications businesses into a new company, L3 Communications Inc, a $650m turnover company. Lockheed still owns a few information technology firms such as distributed Unix reseller Access Graphics Inc, plotters and graphics firm CalComp Technology Inc, and broadcast industry storage firm MountainGate Inc. Northrop Grumman, most famous for the B-2 Stealth bomber, acquired the defense and electronics businesses of Westinghouse Electric Corp in 1996 (CI No 2,822). It has a data systems integration and services division based in Herndon, Virginia. Through its Grumman Data branch, it once had a close relationship with Data General Corp which ended up in bitter litigation during the early 1990s.

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