France and Germany discuss Defense Deal

Rumors of a possible tie-up between French defense electronics group Thales and the European Aeronautic,

Defense and Space Company (EADS) are to be discussed by the German and French economy ministers later this week, a German government spokesman said on Monday. "We expect that this topic will be touched upon when Wolfgang Clement meets with Nicholas Sarkozy" in Berlin on Tuesday, a spokesman for the German economy ministry said at a regular news briefing. Clement and Sarkozy are scheduled to attend the first meeting Tuesday of a Franco-German working group of top corporate executives set up to explore possibilities for industrial cooperation between the two eurozone heavyweights. Press reports have suggested Paris is looking to sell Thales, in which the French government holds a stake of 31.3 percent, to EADS, in which Paris holds 15 percent. The reports said such a proposal is encountering strong resistance in Germany, because such a deal would turn the balance of power within EADS towards France. In Paris, Thales formally denied Monday it had convened a meeting of its board in order to discuss "any form of linkage with EADS". (AFP)