The merger the helicopter industry has waited for since last April became official last week.

The heads of GKN Westland Helicopters and Finmeccanica's Agusta signed an agreement that will create the world's second-largest helicopter entity offering a broad array of civil and defense products.

The merger has a book value of $8.5 billion. Only Boeing's helicopter activities are valued higher.

Westland and Agusta will be 50-50 partners in the joint venture, although Westland has a much larger backlog ($6.3 billion) than Agusta ($2.2 billion). The two will share equal representation on the new board of directors. David Wright, an executive director of GKN and the managing director of its aerospace portfolio, will be the first chairman, while Amedeo Caporaletti, currently president and CEO of Agusta, will be the first chief executive. Richard Case, now chief executive of Westland, will be the first managing director.

The two companies announced they were in exclusive negotiations last April and have carried on a longstanding relationship. Westland and Agusta co-developed the EH101 three-engine medium-lift helicopter, which forms the backbone of this merger.

The multi-role helicopter is optimized for three different roles: civil, naval and military utility. A total of 98 EH101s have been ordered by the Royal Navy, the Royal Air Force, the Italian Navy, the Canadian Armed Forces, and a Japanese customer. Deliveries began in 1997.

Most believe Westland and Agusta will bring complementary strengths to the joint venture. Westland has a strong military focus with particular strengths in project management. Agusta has exposure to several defense programs, but has a stronger reputation in the civil market.

Agusta benefits well from its marketing relationship with Bell Helicopter Textron, with its preeminent position in the world civil market. The Bell-Agusta venture is developing the Bell BA609 tiltrotor for the civil market as well as the Agusta AB139.

The Westland-Agusta joint venture will encompass:

• GKN Westland Helicopters, the transmissions business of GKN Westland Aerospace and GKN's 50% interest in Aviation Training International Ltd, the joint venture with Boeing to provide training to the British Army's Apache fleet.
• The Agusta helicopter business, including its transmissions and structures businesses, Agusta's share of the joint venture for the NH90 program and Agusta's share of the joint venture with Bell Helicopter Textron.

The deal still must be approved by the respective regulatory bodies, but given the slew of recent defense industry consolidations in Europe this is unlikely to be of significance.

"The agreement marks another relevant step forward in the consolidation of the European aerospace and defense industry and confirms the full involvement of Finmeccanica and GKN in the process of restructuring and integration," said the companies in a joint statement.

Some have ventured to say that the new UK-Italian helicopter could be eyeing the French-German backed Eurocopter as a possible merger candidate down the road.