UPDATE 1-Thales wins 1.5 bln euro contract to equip new German frigates

(Adds details, CEO quotes, background)

PARIS, Nov 17 (Reuters) - France’s Thales said on Tuesday it won a 1.5 billion-euro contract to build combat systems for four advanced MKS 180 frigates to be built for Germany by Dutch shipbuilder Damen Schelde Naval Shipbuilding.

It is the third-biggest contract in the history of Europe’s largest defence electronics maker, outpaced only by major deals to equip France’s Rafale fighter and FREMM multi-mission frigate, Thales Chief Executive Patrice Caine told Reuters.

The new ships, to be delivered from 2028, five years later than originally intended following a long procurement process, will be used for attacking targets on land and underwater, as well as providing aerial protection to other vessels.

It follows a pan-European tender which drew some criticism in Germany.

Damen was picked this year to build the frigates and entered talks with partner Thales for systems including the Above Water Warfare System, developed with Dutch government funding.

The system is designed to resist “saturation attacks” meant to overwhelm a ship’s defences. Thales is developing similar technology for Belgian and Dutch navies.

Damen and Thales had reportedly faced competition from Bremen-based shipyard Luerssen and Thyssen Krupp Marine Systems and German Naval Yards paired with Britain’s BAE Systems.

Caine said the decision to open a European tender and to select an international team reflected a choice based on technology. Analysts say single-country defence contracts have often been driven by protecting national champions.

“The project underscores Damen’s and Thales’s ambition to build further cooperation with shipyards and partnering industries in high-end European naval programmes,” Thales said.

Last year a consortium including Thales won a contract to build five general-purpose T31 frigates for Britain.

Thales is also part of a team developing France’s newest frigate, the FDI Defence and Intervention vessel.

“If these navies choose us, it’s because we are British in Britain, German in Germany, French in France,” Caine said.

Thales said the frigates would be designed by Damen and built in Germany under Damen’s control, with options for up to two more ships.

Caine said it was too early to judge the impact of negotiations to complete Britain’s exit from the European Union. (Reporting by Tim Hepher; editing by Jonathan Oatis and Dan Grebler)