About Australian Defense Industries

In May 1989, Australian Defence Industries (ADI) was created as a government-owned corporation to take over the major defence industry facilities still in government ownership. Australian Defence Industries (ADI) superseded the Office of Defence Production which had been established within the Department of Defence to improve the competitiveness of government owned dockyards and defence establishments. The Defence Minister explained that the launching of ADI was part of broader process to ‘step away from the bureaucracy and politics’ and make government factories and dockyards ‘an integral part of Australian industry’.

Its four operating divisions were naval engineering at the Garden Island dockyard, ammunition and missiles, weapons and engineering and military clothing. As a prime contractor in the Australian naval shipbuilding market, ADI’s main projects were the build of six minehunter vessels and the ongoing upgrade of the FFG-7 Adelaide class frigates.

About Thomson-CSF – Thales Group

Thomson-CSF – Thales Group is a French multinational company that designs and builds electrical systems and provides services for the aerospace, defence, transportation and security markets. Its headquarters are in La Défense, and its stock is listed on the Euronext Paris.

World-class technology, the combined expertise of  64,000 employees and operations in 56 countries have made Thales a key player in keeping the public safe and secure, guarding vital infrastructure and protecting the national security interests of countries around the globe.

About Transfield

Transfield Holdings is a privately-owned investment company with extensive experience in industrial services, infrastructure and renewable energy. Transfield specialises in the development and management of businesses that are focused on industrial services, infrastructure and renewable energy.

The Deal

Australia Federal Government has selected a joint venture between France’s Thomson-CSF and Australia’s Transfield as the preferred purchaser of the state-owned defense company ADI, the Australian ministers of defense, and finance and administration said yesterday.

Australia made the decision despite fears that the sale would cause problems with the United States over technology transfer issues to Thomson-CSF.

France’s Thomson-CSF has won a half share in Australian Defence Industries (ADI) after succeeding in a joint venture bid for 100% of the state-owned defence contractor.

The Australian Government selected a bid from the French company and Australian infrastructure developer Transfield – together known as Transfield Thomson-CSF Joint Venture – ahead of an application from British Aerospace, which had teamed with Australian defence company Tenix.

Thomson-CSF has a major presence in Australia, having won contracts to modernise its civil air traffic control system and to supply sonars for naval submarines. As part of its bid, the European company guaranteed that ADI would continue to operate from Bendigo, Lithgow, Newcastle and Albury.

Thomson-CSF has synergies with ADI in naval combat systems, surveillance, communications, and simulation and training. The pair also have similar operating margins of about 5%. Ranque expects the acquisition to have a positive financial effect from 2000.

Denis Ranque says the deal – to be completed by the end of September – was agreed at a “very reasonable” price, given the Australian company’s 1998 turnover of A$550 million ($360 million).

Qotes

“The advantages for ADI to be partnered with Thomson-CSF has so many advantages in terms of scale, opportunities and technological availability, that they obviously outweighed other concerns,” said Stuart Slade, an analyst with Forecast International/DMS.