Westland Corp, the British company that brought the iron lady Margaret Thatcher's government to the brink of resignation in the late 80s, has announced that its parent company GKN had reached an agreement with Italian firm Finmeccanica to create a global copter-making company to rival Boeing of America, the world's biggest aircraft maker.

Westland Corp has been in financial doldrums since the early 90s ever since it had to withdraw the assembly lines of its civilian helicopter. However, the military side of the company is highly profitable making Sea-King naval helicopters and assembling the American Apache gunships for the Royal Army.The merger of the two rival European companies was first envisaged in 80s by the Tory deputy prime minister Michael Heseltine at the height of Westland crisisin January 1986, but opposed by Thatcher.

The Westland saga suddenly erupted when the financially strapped company sought a rescue deal with the American Sikorsky. The bail out was opposed by Heseltine, the then defence minister who wanted instead the company to opt for a European consortium.

The memorandum of understanding now signed between Finmeccania, the parent company of Augusta Aviation and Westland parent GKN paves the way for merger of two companies by next year.

Together the two companies would have a combined order book of 5.5 billion dollars. The company's spokesman Mark Halloran said the merger was part of consolidation of defence industries worldwide.

He said: ``After this deal we have to look for expansion of market and production to rival the Americans.'' Though the financial details of the merger were not made public, industry sources were quoted in the media as saying that Westland would have the lion's share as the company was more profitable than the Italian firm.

The combinedWestland-Augusta venture will be better placed to compete with American giant Boeing, whose current order book is worth over 5.9 billion pound sterling. The spokesman said the merged company would concentrate on joint development of new civilian range of helicopters, while at the same time improve upon the military versions of Sea-King.