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. The merger of the two rival European companies was first envisaged in the 80s by the Tory deputy prime minister Michael Heseltine at the height of the Westland crisis in January 1986 but was opposed by Thatcher.

The memorandum of understanding now signed between Finmeccania, the parent company of AugustaAviation 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 combined Westland-Augusta venture will be better placed to compete with Boeing, whose current order book is worth over 5.9 billion pound sterling.