PARIS (Reuters) - Airbus Group (PA:AIR) and fellow France-based company Safran (PA:SAF) said on Monday they had signed an agreement for the second phase of a merger of their space launcher activities.
The two are combining these activities in response to competition from private U.S. launch provider Space X and in order to prepare for the next version of Europe's Ariane rocket.
Under the deal, engine maker Safran will, as expected, pay 800 million euros (627.69 million) to Airbus Group to ensure an equal 50/50 ownership split in the new venture, sources close to the talks said.
The long-awaited agreement will close in the second quarter, the aerospace groups said in a joint statement.
The second phase calls for the integration of industrial assets and military launchers, turning their existing Airbus Safran Launchers venture into a "fully fledged operational company", the two partners said.
The deal had been held up for months as the two companies and the French government debated how the lump sum arriving in Airbus coffers should be treated for tax purposes.
"An agreement has been reached between Airbus Group and Safran on the fiscal details of the operation, which conforms to French legislation," one of the sources said.
Airbus said details would be released at the closing of the deal, which was still subject to various formalities.