* Sweden had ruled out buying new submarines from German firm
* Saab says deal in line with naval expansion plans
* Negotiations at early stage
STOCKHOLM, April 14 ThyssenKrupp has signed a memorandum of understanding to sell its shipyard business in Sweden to defence firm Saab after the Swedish government made it clear it would not buy new submarines from the German conglomerate.
Saab said in a statement on Monday negotiations between the two companies were at an early stage and more information would follow.
Saab said the deal was in line with its ambition to expand its naval activities and help Sweden meet its needs for the design, production and maintenance of submarines and warships.
"An acquisition of ThyssenKrupp Marine Systems will enable Saab to meet this ambition," it said in a statement.
ThyssenKrupp won a deal to design new submarines in 2010, but earlier this year Sweden's defence procurement agency asked Saab to come up with a strategy to support Swedish submarine naval forces. Swedish investment firm Investor AB owns a 30 percent stake in Saab.
The government later said it had ruled out ThyssenKrupp as the producer of new submarines for the country due to conflicting views over the commercial terms.
ThyssenKrupp Marine employs around 1,000 staff in Sweden, mainly in the southern Swedish cities of Malmo and Karlskrona. It had sales of 1.9 billion crowns ($291 million) in its 2011/2012 fiscal year, according to its annual accounts filed in Sweden. (Reporting by Mia Shanley. Editing by Jane Merriman)