When you hear the phrases "strong military" or "military-industrial complex," one country comes right to mind. That's right: France.
If you've finished laughing yet -- no? -- OK, I'll wait.
Done now? Great. So, as I was saying, according to an AP wire report published Friday, the French government is rumored to be pushing for a merger between Europe's largest aerospace company, European Aeronautic Defence and Space Company, and France's largest defense company, Thales SA.
Why would France want this? It probably has something to do with Gallic pride, and the fact that the French government already owns 15% of EADS (EADS' other owners include Germany's DaimlerChrysler
If the deal ever comes to pass, this is what we'd be looking at over on the Continent: a defense, aerospace, and IT juggernaut with over $50 billion in annual sales and more than $330 million in profits -- a conglomerate growing sales at a 20% clip and employing nearly 170,000 people. This will, of course, result in French boasts of finally having the world's largest defense company, bigger even than American champion Boeing. That would be true in terms of annual sales, because EADS/Thales would have a billion euro or so more of those than does Boeing. But investors, as opposed to jingoists, should be more interested in the fact that Boeing makes twice the profits off of its $50 billion in sales as EADS and Thales do off their combined $52 billion. And last year, Boeing's profits increased at more than twice the rate of the putative European combination.
While we're on the subject of airplanes, it's also worth noting that EADS/Thales would inherit (European regulators permitting) EADS' 80% controlling stake in Airbus (the other 20% is owned by the United Kingdom's BAE Systems). Speaking of which, there's probably a joke in here somewhere about historically Socialist Europe having a bunch of defense companies all listed on so-called "Pink Sheets" -- but I won't go there.
Parlez-vous "defense"? If not, bone up with these Foolish primers:
Fool contributor Rich Smith owns no shares of any companies mentioned in this article.