BRITISH Aerospace has taken a major step in its ambitions to become a world leader in guided weapons through a joint venture agreement with a French defence group.

It is teaming up with Lagardere Groupe to form a business known as Matra BAe Dynamics, which will be equally owned between the two companies. BAe said the business would have an annual turnover of about £1 billion sterling, a combined current order book of approximately £2.6 billion and employ 6,000 people in Britain and France.

Lagardere, with the backing of BAe, is in the process of trying to take over defence giant Thomson, which is being privatised by the French government, with a bid believed to be in the region of about £900 million.