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Pentagon targets Europe
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July 7, 1999: 4:05 a.m. ET
Report: U.S. defense officials promote transatlantic M&A activity
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LONDON (CNNfn) - Pentagon officials are in talks with some European governments and leading defense players in the region to encourage more transatlantic tie-ups, according to a report published Wednesday.
The rapid consolidation of the U.S. defense and aerospace sector has made the Pentagon keen to encourage competition from European players where merger and acquisition activity is only now starting to catch up with the U.S.
Jacques Gansler, the Pentagon's acquisition chief, told The Wall Street Journal that a round of transatlantic deals or agreements within the European industry could begin within "months, not years".
Gansler said Pentagon officials will meet with the governments of Britain, France, Germany and Italy, as well as leading aerospace players such as British Aerospace, DaimlerChrysler Aerospace (Dasa), and France's Aérospatiale Matra and Thomson-CSF.
European governments have already signaled their support for a so-called European Aerospace and Defense Company, but the Pentagon is keen to avoid the creation of a single monopoly player in Europe, according to the Journal.
A planned mega-merger between British Aerospace and Dasa stalled last year when the U.K. firm bought the defense assets of GEC-Marconi. Dasa last month secured a stake in Spain's Casa.
Gansler also said the air campaign in Kosovo had highlighted "a growing separation of technology" between the U.S. and European states that "could be harmful if allowed to continue".
While the U.S. is encouraging more European deals, it has also been active in limiting further activity in its own backyard, where the defense sector has shrunk to three key players - Boeing (B), Lockheed Martin (LMT) and Raytheon (RTN.B) - over the past 10 years. Last year it blocked Lockheed's planned takeover of Northrop Grumman (NOC).
Gansler said the Pentagon wanted "to change [its] policy" on mergers and did not rule out approval for a European acquisition of a major U.S. defense player, such as Grumman. 
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