Top Poland defence group PHO attracts foreign partners

By Chris Borowski

KIELCE, Poland, Sept 3 (Reuters) - Poland's top defence group PHO, favoured as a partner by foreign defence companies vying for a share of Poland's military spending spree, has signed a cooperation deal with Boeing (NYSE: BA - news) and unveiled a prototype of a new tank with BAE Systems (LSE: BA.L - news) .

Poland aims to spend some $45 billion in the next decade to build a new missile shield and upgrade its weapons systems, including transport helicopters and tanks, but wants foreign bidders to work with local companies on the projects.

Two of the three bidders in the helicopter tender -- United Technologies' Sikorsky and Finmeccanica (Other OTC: FINMF - news) 's AugustaWestland -- already produce aircraft with Polish partners.

EADS (Paris: NL0000235190 - news) 's Eurocopter has vowed to open an assembly line in Poland.

State-owned PHO, or Polish Defence Holding, hopes to be the main beneficiary of the spending, building on its position as the main supplier to the country's armed forces. It also wants new partnership to help it expand abroad.

As part of an earlier cooperation agreement with BAE Systems Hagglunds, the two companies demonstrated the prototype of a new lightweight tank dubbed PL-01 at this week's security trade show in Kielce, southern Poland.

The new vehicle, based on the CV90 tank, will provide fire cover and transport capabilities.

PHO also signed a letter of intent with Boeing covering areas where the two companies might work together, but said it was too early to discuss details of likely co-operation.

"I hope this will be a synergetic relationship in which PHO will also get access to new markets and Boeing gets to add to its supplier chain," said Joe McAndrew, Boeing's head of international business development in Europe, Israel (Other OTC: IRLCF - news) and Central Asia.

PHO, a sprawling group comprised of 40 companies with 10,000 workers, produces weapons from armoured vehicles to missiles, ammunition and firearms.

It is expected to play a leading role in the construction of Poland's planned anti-missile protection with foreign partners.

"We are holding active discussions with PHO because we understand that it will be the main local partner for the missile shield programme," said Douglas Stevenson, Senior Manager and Director for Poland for U.S. defence electronics company Raytheon Co (NYSE: RTN - news) .

PHO has agreed to work on a joint bid for the missile programme with Europe's MBDA consortium which includes BAE Systems, EADS and Finmeccanica, but has said it would cooperate with others if needed.

Raytheon and MBDA are among more than a dozen groups in discussion with Polish officials on the construction of the mid-range portion of the missile shield, which is expected to cost at least $4.5 billion.

Poland is expected to narrow down the field later this year and decide late next year on who will build it.