DaimlerChrysler Unit, Northrop Weigh Pacts
Northrop Grumman Corp. and DaimlerChrysler’s Dasa aerospace unit said Tuesday that they may form alliances of several of their businesses in a bid to broaden access to each other’s defense markets.
Dasa is Germany’s biggest aerospace and defense company, while Century City-based Northrop is No. 5 in the U.S. The companies signed a memorandum of understanding to study cooperating in businesses, including radar, unmanned aircraft and surveillance systems.
The partnership could open more of the $60.3-billion U.S. defense hardware market to Dasa and give Northrop a better chance at selling weapons in Europe. The cooperation would continue after Dasa merges with France’s Aerospatiale Matra and Spain’s Casa to form European Aeronautic, Defense & Space Co., or EADS, Europe’s largest aerospace company.
“If this works out, it will be a great breakthrough,” said Albrecht Denninghoff, an analyst at Bankgesellschaft Berlin.
Defense companies on both sides of the Atlantic have sought to expand cooperation as a cost-effective way to enter new markets and erode political barriers.
“There is no doubt that the security needs on both sides of the Atlantic can only be satisfied based on the best use of scarce resources,” Northrop Grumman Chief Executive Kent Kresa said in a statement issued by Dasa.
In New York Stock Exchange trading, Northrop shares rose $2.13 to close at $72.56, and DaimlerChrysler gained $1.63 to close at $60.44.
The companies said they hope to make decisions about topics of cooperation by June. They first need to ensure any alliances don’t violate U.S. laws, which restrict sales outside the U.S. of some defense-related technology.
Britain’s BAE Systems and Seattle-based Boeing Co. have been intensifying cooperation in recent months. They are developing the Meteor, a proposed beyond-visual-range missile, and participate in an Internet-based aerospace trading exchange with Lockheed Martin Corp. and Raytheon Co.
BAE and Boeing submitted a joint bid Tuesday for a stake in Korea Aerospace Industries Co., a move the companies said they were considering in February.
