The Northern Ireland missile maker, Shorts Missile Systems Ltd, could be taken over by the French firm which has a large stake in the company.

Joint owner Thomson CSF has approached Shorts' Canadian owner, Bombardier, to discuss buying it out in a multi-million pound deal.

A spokesman for Shorts said that staff in the missile division had been told of the talks, which were expected to conclude next month.

He said: "Thomson believe that SMS has a successful future, given the solid foundation of technological excellence and world class products.

"The trend in the defence industry is towards integration and consolidation. Thomson believes that SMS can achieve its full potential."

Starstreak success

SMS - which was established six years ago to capitalise on Shorts' expertise in missiles and Thomson's electronics capabilities - last week announced a �200m contract with the British Ministry of Defence to supply more of its highly successful ground-to-air Starstreak missiles.

That deal was said to have safeguarded more than 700 jobs both in SMS and in its network of local independent suppliers.

It also recently unveiled a �1.6m Industrial Development Board backed expansion of its state-of-the-art operations centre in Castlereagh, east Belfast.

It is not yet clear how the workforce of SMS would be affected if the deal goes ahead.

Starstreak first entered service with the army in 1997 as a front line defence system against attack from aircraft and helicopters.