Citing a source close to the discussions, the newspaper said that the talks had the blessing of Dassault Aviation, the maker of fighter and business jets.

Dassault is in exclusive talks with Alcatel-Lucent to acquire the latter's 20.8 percent stake in Thales.

Safran is 30.4 percent owned by the French state which also has a 26.5 percent stake in Thales.

A Safran spokeswoman said such an asset swap was "part of our considerations" while an executive at Thales said the newspaper report was "speculative".

He said Thales fully supported efforts by Dassault to become the company's largest private shareholder.

"Dassault is already a shareholder in Thales and we consider this movement friendly and we support it totally," Reynald Seznec, chief executive of Thales Alenia Space, said at a briefing for reporters.

Seznec said the move would not affect Thales Alenia Space, 67 percent owned by Thales and 33 pct by Finmeccanica.

ThalesAlenia Space expects to increase revenue by an average 3 to 5 pct in the coming years despite the financial crisis, he said.

(Reporting by Tim Hepher, Marcel Michelson and Julien Ponthus; Editing by David Holmes, Greg Mahlich) Keywords: THALES/SAFRAN (marcel.michelson@thomsonreuters.com; +33 1 4949 5130; Reuters Messaging: marcel.michelson.reuters.com@reuters.net)

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acquire its stake in thales

* Says acquisition price will be 38 euros per share

* Says dassault aviation has launched discussions with the French state to

define the scope of their partnership as shareholders of thales

((paris.equities@news.reuters.com, +33 1 4949 5452))

(For more news, please click here)

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Alcatel-Lucent, the world's largest maker of fixed line telecoms equipment, said the exclusive talks were for 38 euros a share. Thales shares closed at 30.44 euros on Monday, giving the whole company a market value of some 6 billion euros ($7.59 billion).

Dassault would pay around 1.52 billion for the stake, according to Reuters data.

Shares in Alcatel-Lucent were 7.4 percent higher at 1.95 euros in early trade, while Thales stock was up 5.5 percent at 32.10 euros.

In addition, Dassault Aviation has launched discussions with the French state to define the scope of their partnership as shareholders of Thales, it said. Changes in Thales capital must be approved by the French government, which has a 27 percent stake and a special veto.

Dassault Aviation said in October it could also buy the 5 percent stake owned by family holding Marcel Dassault Industries.

Speculation that Alcatel-Lucent might sell the Thales stake to refocus on its loss-making telecoms equipment activities has grown since September, when it appointed a new chairman, a veteran of past battles over Thales.

Thales, Europe's largest defence electronics company, supplies the radar on France's Rafale warplane, which is built by Dassault. It is also a supplier to aerospace company EADS but the two compete in defence electronics, an area in which EADS is relatively weak.

Shares in Thales, then known as Thomson-CSF, were worth 36 euros on the day it was privatised in July 1998, with Alcatel and the Dassault family as core shareholders.

In 1999, Alcatel boosted its stake in Thales to 25.3 percent by buying stock at 36 euros.

In 2002, it sharply reduced its stake by selling stock for 30.5 euros a share under pressure from rating agencies and banks following the dot-com collapse. It pushed its stake back above 20 percent shortly after the Lucent merger in exchange for space assets.

(Reporting by Caroline Jacobs; Editing by Chris Wickham) ($1=.7921 Euro) Keywords: ALCATEL LUCENT/ (paris.equities@news.reuters.com; Reuters Messaging: caroline.jacobs.reuters .com@reuters.net; +33 1 49 49 53 43)

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Alcatel-Lucent, the world's largest maker of fixed line telecoms equipment, said the exclusive talks were for 38 euros a share. Thales shares closed at 30.44 euros on Monday, giving the whole company a market value of some 6 billion euros ($7.59 billion).

Dassault would pay around 1.52 billion euros for the stake, according to Reuters data.

Shares in Alcatel-Lucent were 7.4 percent higher at 1.95 euros in early trade, while Thales stock was up 5.5 percent at 32.10 euros.

In addition, Dassault Aviation has launched discussions with the French state to define the scope of their partnership as shareholders of Thales, it said. Changes in Thales capital must be approved by the French government, which has a 27 percent stake and a special veto.

Dassault Aviation said in October it could also buy the 5 percent stake owned by family holding Marcel Dassault Industries.

Speculation that Alcatel-Lucent might sell the Thales stake to refocus on its loss-making telecoms equipment activities has grown since September, when it appointed a new chairman, a veteran of past battles over Thales.

Thales, Europe's largest defence electronics company, supplies the radar on France's Rafale warplane, which is built by Dassault. It is also a supplier to aerospace company EADS but the two compete in defence electronics, an area in which EADS is relatively weak.

Shares in Thales, then known as Thomson-CSF, were worth 36 euros on the day it was privatised in July 1998, with Alcatel and the Dassault family as core shareholders.

In 1999, Alcatel boosted its stake in Thales to 25.3 percent by buying stock at 36 euros.

In 2002, it sharply reduced its stake by selling stock for 30.5 euros a share under pressure from rating agencies and banks following the dot-com collapse. It pushed its stake back above 20 percent shortly after the Lucent merger in exchange for space assets.

(Reporting by Caroline Jacobs; Editing by Chris Wickham) ($1=.7921 Euro) Keywords: ALCATEL LUCENT/ (paris.equities@news.reuters.com; Reuters Messaging: caroline.jacobs.reuters .com@reuters.net; +33 1 49 49 53 43)

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Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

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