France's two main warship makers, DCN and Thales SA, won EU approval Tuesday to combine their shipbuilding businesses, boosting the prospect of wider consolidation in Europe's fragmented naval sector.
The European Commission said its investigation showed the deal would not cause antitrust problems because the two already cooperate closely and a number of effective rivals would remain standing.
Thales had already sold most of its naval equipment business to DCN before the deal, it said, meaning that any new changes would be limited and there was little chance of the combined company choking supply to rivals.
DCN will acquire Thales' naval assets, including its stakes in their existing joint ventures, Armaris and MOPA2 -- the unit established to build a second aircraft carrier for the French navy.
Thales paid $180m for a 25 percent stake in DCN, valuing the company at euro2.8 billion $3.4b.
The French state currently owns a 75 percent stake in DCN, and held 31 percent of Thales when the deal was announced on Dec. 15.
Unlike the military aerospace sector, concentrated around Britain's BAE Systems PLC and Airbus' Franco-German parent, European Aeronautic Defence and Space Co., Europe's warship building industry remains fragmented and inefficient.
But any attempt to build a European giant to rival U.S. warship maker Northrop Grumman Corp. would be fraught with political problems -- not least of which would be the prospect of widespread shipyard restructuring and job cuts.