Related Links:

• Financial Defense Update, April 2007
• Thales 2006
• Naval Systems at Defendory 2006

DCN and Thales have finalized with the French Government a merger agreement which leads the way to major consolidation in the European naval defense industry. Under the agreement, Thales transferred its naval operations in France to DCN and has acquired a 25% stake in DCN while the French government will retain a 75 % stake in DCN. This transaction will position Thales as "the industrial shareholding partner" of DCN and the terms of governance will allow Thales to play an active role on the Board of Directors to support the development of DCN. There will also be the possibility for Thales to increase its stake in DCN to 35% over the next two years.

DCN is therefore becoming the sole shareholder of Armaris and MOPA2, the prime contractor for France’s PA2 aircraft carrier program. DCN is also producing the FREMM multimission frigates, under cooperation with Italy's Ficcantiery group. The approximate pro forma turnover for 2006 of DCN in its new perimeter is close to 3 billion euros with an order book superior to 10 billion euros and a workforce of 13 300 persons.

DCN has realigned the FREMM multimission frigate program, which has recently moved from the design to production phase. According to a company press release, "To ensure the program’s success, priority will be given to using the group’s own shipyards and facilities while taking account of the program’s ambitious cost targets." Under the new scheme DCN’s Lorient shipyard will be positioned as prime contractor for the eight FREMM frigates on order. Furthermore, from now on, priority will be given to DCN’s own shipyards and facilities in all cases, provided that program’s cost targets are met. This strategy is expected to result in the formulation of an industrial organization that will allow the group to win new international contracts, to sustain a larger production capacity. The shipbuilding phase began in late February with the cutting of the first plates at DCN’s Lorient shipyard. The industrial process for the first tranche is on course for the delivery of the first-of-type in 2011. The second-of-type is scheduled for delivery 13 months later and the others at a rate of one every seven months until 2016.