Tuesday, January 31, 2012

Dassault Rafale Is Lowest Bidder in India Combat Jet Contest

Dassault Aviation SA emerged as the lowest bidder to supply 126 fighter jets to the Indian Air Force, a person with direct knowledge of the matter said.

The Defense Ministry will begin negotiations with Dassault within 10 to 15 days, the person told reporters in New Delhi today, speaking on condition of anonymity because the proceedings aren’t public. Talks will likely last for weeks, pushing the signing of a contract beyond the March 31 end of India’s fiscal year, he said.

Dassault jumped as much as 22 percent in Paris trading. Indian law requires the government to negotiate a contract with the lowest-bidding vendor. Dassault, whose only customer for the Rafale fighter jet so far is the French armed forces, is competing in the $11 billion contest against the Typhoon, or Eurofighter plane built by BAE Systems Plc (BA/), European Aeronautic, Defence & Space Co. and Italy’s Finmeccanica Spa. (FNC)

The French company’s stock rose as much as 137 euros to 749 euros, and traded at 740 euros at 1:32. p.m. A majority of the stock is held by the Dassault family, and EADS (EAD) owns 46 percent.

France had been left to pay the full production costs for the plane after it was rejected by countries including Singapore, South Korea, Morocco and Switzerland. Dassault is also still competing to win a contest in the United Arab Emirates, and remains in talks with Brazil about a contract.

India shortlisted the Rafale and Eurofighter in April, when it rejected bids from U.S. manufacturers Lockheed Martin Corp. (LMT) and Boeing Co. (BA), as well as Saab AB (SAABB) and OAO United Aircraft Corp. The country is buying the fighters to replace an aging fleet of Russian MiG-21s and Dassault Mirage 2000s.

Dassault had no immediate comment. The company recently lost a contest to Saab’s Gripen in Switzerland, and Dassault has since sought to get back into the contest by offering a new commercial offer that includes fewer and modified Rafale jets.

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