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Safran absorbs SNPE. It's ok says commissioner Almunia

The marriage of the engine (Safran) and the fuel (SME-SNPE) is “consumed”, so to speak! The European Commission, in fact, authorized, on Wednesday (March 31), the acquisition by the Safran group of the “solid propellant rocket engines” activity of the French public company SNPE. A decision approved by the European Commissioner in charge of Competition, the Spaniard Joaquin Almunia.

No problem on the competition side for “Brussels”

"After examination, the Commission has reached the conclusion that the transaction would not significantly impede effective competition in the European Economic Area or a substantial part of it.“. Formula used to estimate that the DG Competition does not consider it necessary to open an in-depth examination procedure (*).

The Commission’s review “shown that the consolidation of the activities of SAFRAN and SME would not lead to a foreclosure of inputs or customers, due to the presence of other suppliers, the already existing relationship between the parties and the relatively limited presence of SAFRAN in the relevant markets. "

The merger of engine-fuel activities

By absorbing the “solid propellant rocket engines” activity of SNPE, Safran specifically acquires:

– 100% of the SME (SNPE Energy Materials). SME designs, develops and manufactures propellant charges and energy equipment for the aeronautics, aerospace, automotive and defense industries, as well as propellants for military use and raw materials related to these applications. It also manufactures composite materials used in aerospace, defense and other industries;

– the stakes held by SME in Roxel, a joint venture controlled with MBDA (missile manufacturer and subsidiary of EADS) and specializing in “solid propellant rocket engines”, in PyroAlliance and Structil.

– a participation (40%) in the joint venture Regulus, a French company controlled with the Italian company Avio, which operates a solid propellant production plant in French Guiana, where the main segments of solid propellant rocket engines are Ariane 5 are loaded with fuel.

A strategic merger

This merger, negotiated for several years, is in line with the French government's desire to restructure the defense industry around strong industrial centers, capable of competing on a global level (or even having a leadership position). The 2009 military programming law had, in fact, put SNPE on the list of privatizable companies, a necessary step for this merger. The State will, however, retain a say in the SME, in the form of a “golden share” (share with privileged voting rights).

Safran is already not small: with 54.000 employees, around 80% of whom are in France, it covers a wide range of aeronautical, defense and security activities: designing and manufacturing helicopter engines (Turbomeca) or aircraft or rockets (Snecma) – such as the CFM56 (a bestseller which equips both the Boeing 737 and the Airbus A320), the M88-2 which equips the Rafale or the Vulcain mounted on the Ariane rocket -, aeronautical flaps, tactical missiles (Mistral or Super 530), landing gear (Messier-Dowty) or brakes (Messier-Bugatti). It also offers navigation systems (Sagem Avionique) or night sight binoculars (Sagem Optronique), provides engineering, maintenance, fuel supply for Ariane or M51 missiles, digital biometrics, etc.

Its subsidiary Sagem has notably produced the FELIN system (Infantry with Integrated Equipment and Liaisons), “digitalizing” the infantryman with electronic vest, equipped with individual radio and integrated GPS, mini-terminal displaying data (orders, positions of teammates, etc.) and osteophonic headband (allowing the use of radio discreetly by transmitting sound through the vibration of the bones of the skull)...

(*) Any concentration of European size must be formally notified to the European Commission. From the date of notification, DG Competition has 25 working days to decide whether to authorize this operation (phase I) or to open an in-depth investigation (phase II). The Safran-SME operation was notified to the Commission on February 23, 2011. And DG Competition deemed it unnecessary to move on to phase II.

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).