Europe's biggest defence electronics and telecommunications group was born last month when Alcatel Alsthom and Dassault became strategic partners of the French state-owned defence electronics group Thomson CSF. The move - which creates a powerful R&D base worth more than FFr 25 bn (about £2.6 bn) - is the first step in a reorganization of France's defence electronics industry.

The French government remains the largest shareholder in Thomson CSF with more than 35% of the shares; Alcatel Alsthom owns 20% and Dassault about 8%. The public company Aerospatiale has also been included in the deal and will be linked to Alcatel Alsthom in a new venture combining their research on satellite technologies and communications.

Thomson CSF currently employs more than 11 000 researchers and Alcatel Alsthom more than 27 000. No decisions have been made on how their research activities will be combined but researchers are worried that there will be job losses.