Aerospace units weigh partnership; U.S.-German alliance could broaden access; Defense

THE BALTIMORE SUN

STUTTGART, Germany -- DaimlerChrysler AG's Dasa aerospace unit and Northrop Grumman Corp. said yesterday they might form alliances of several of their businesses in a bid to broaden access to each other's defense markets.

Dasa is Germany's biggest aerospace and defense company, while Northrop is No. 5 in the United States. The companies signed a memorandum of understanding to study cooperating in businesses including radar, unmanned aircraft and surveillance systems. Northrop's radar business is based at its defense electronics unit in Linthicum.

The partnership could open more of the $60.3 billion U.S. defense hardware market to Dasa and give Northrop a better chance of selling weapons in Europe. The cooperation would continue after Dasa merges with France's Aerospatiale Matra SA and Spain's Casa to form the European Aeronautic, Defense and Space Co., Europe's largest aerospace company.

"If this works out, it will be a great breakthrough," said Albrecht Denninghoff, an analyst at Bankgesellschaft Berlin.

Defense companies on both sides of the Atlantic have sought to expand cooperation as a cost-effective way of entering new markets and eroding political barriers.

The companies said they hope to make decisions on where they will cooperate by June. They need to ensure any alliances don't violate U.S. laws, which restrict sales of some technology.

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