MUNICH (Reuters) -Germany's Hensoldt is considering an acquisition of the defence electronics segment of Italy's Leonardo as part of efforts for European consolidation, CEO Thomas Mueller said in comments released on Thursday.
While a small number of defence companies dominate the market in the United States, the European defence sector - which entered a boom phase after Russia's invasion of Ukraine - is considered highly fragmented.
"That would be a possible way forward" and would be conceivable in the short term, Mueller said about the potential acquisition at an event in Munich late Wednesday. "In the long term, we have to be on a par with the Americans."
Hensoldt, which produces radar and high precision optics used in aircrafts, ships and tanks, has expanded production capacity over the past year and expects to receive a number of orders from the German government in the coming months.
Leonardo's CEO said last year the group aims to become the leader in defence electronics in Europe and bought a stake in Hensoldt to move towards its goal.
Leonardo declined to comment on Thursday.
Hensoldt, which makes radars for the Iris-T air defence system, would also consider taking over parts of Thales, though France considers defence of particular strategic importance, Mueller said.
"France will have to face up to reality that you cannot do everything alone," he said.
Domestic transactions with the likes of Rheinmetall were also among options to achieve consolidation, Mueller said.
Rheinmetall did not immediately respond to a request for comment.