U.S., Germany Discuss Defense Firm Mergers

U.S. and German defense officials met for nearly four hours in Washington on Tuesday to lay the groundwork for potential mergers of European and American defense firms, a Pentagon spokesman said.

The meeting, similar to one held recently with British officials, is part of a change in Pentagon policy signaled last month by U.S. Undersecretary of Defense Jacques Gansler.

Gansler said in early July that he expected a significant number of mergers between U.S. and European defense firms “within months rather than within years,” softening Washington’s opposition to such a trend while stressing that American military secrets must be protected. The Pentagon is willing to consider the takeover of such defense mainstays as General Dynamics Corp., Northrop Grumman Corp. and TRW Inc.

Pentagon spokesman Glenn Flood said Tuesday’s meeting permitted the United States to talk about “what we think should be done if there is going to be a matching of companies and assets.”

Flood said the meetings with the Germans and the British were only the beginning. “More meetings are expected,” he said, adding that they may involve Dutch, French and Italian officials.

Flood said that while nothing was announced as a result of the meeting, it helped establish a new defense policy on mergers. “We’ve always had cooperation with these countries, and when we establish a policy, we want to make sure it increases cooperation,” he said.

Gansler led the U.S. delegation and Hans Heinrich Weise, head of the German defense ministry’s armaments department, led the German delegation of about 10.

The main issue in the talks was the tough U.S. restrictions on the foreign transfer of sensitive information, German officials said before the meeting.