BRUSSELS — Europe is finally firing back at Elon Musk. Aerospace companies Airbus, Leonardo and Thales said Thursday they had reached a preliminary agreement to combine their space activities to create the kind of European champion that Commission President Ursula von der Leyen has envisaged. Announcing “a leading European player in space,” the companies said they would combine their satellite and space systems manufacturing into a €6.5 billion business that will employ around 25,000 people across Europe.  The three-way deal seeks to create a challenger to Musk’s SpaceX — especially in low-earth orbit satellites of the type that power his Starlink internet service. SpaceX’s projected 2025 revenue is around $15 billion. The deal — initially named Project Bromo after a volcano in Indonesia — has been a long time coming. Talks among the three companies were complicated by the involvement of five governments as shareholders or partners. And winning antitrust approval was always going to be a tall order. France, Italy, Germany, Spain and the U.K. will all have an interest in the new company, which will be headquartered in Toulouse in southern France but will be split out into five different legal entities to preserve sovereign interests. The governance structure mirrors that of European missilemaker MDBA.  Airbus, the European aerospace giant, will own a 35 percent stake, while Leonardo of Italy and Thales of France will own 32.5 percent each. There will be a sole yet-to-be-named CEO and managing directors for each country, an Airbus spokesperson told POLITICO. French Economy Minister Roland Lescure hailed the announcement as “excellent news.” “The creation of a European satellite champion allows us to increase investment in research and innovation in this strategic sector and reinforce our sovereignty in a context of intense global competition,” he said in a post on Bluesky. Sounding rather less enthusiastic, a spokesperson for German Economy Minister Katherina Reiche said Berlin was following the possible consolidation of the European aerospace industry “with great interest” and was in touch with Airbus and its defense subsidiary. LEAGUE OF CHAMPIONS France and Germany have been vocal on the need to create continental champions — with industry chiefs from both countries recently issuing a joint appeal to Brussels to relax its merger rules to enable companies to gain scale and compete in a global setting. In a twist of irony, the deal involves a company — Airbus — that is widely seen as the only European corporate champion ever built. With roots dating back to 1970, Airbus was created in its current incarnation through a Franco-German-Spanish merger in 2000. France and Germany each own 10 percent stakes and Spain 4 percent. Italy has a 30 percent stake in Leonardo, which in turn owns 33 percent of Thales Alenia Space.  The new company will pool, build and develop “a comprehensive portfolio of complementary technologies and end-to-end solutions, from space infrastructure to services.” It is expected to generate annual synergies producing “mid triple digit million euro” operating income five years after closing, which is expected in 2027, according to a press release.  MERGER HURDLE The tie-up requires a green light from the Commission’s competition directorate, which will have to weigh the tension between its current rulebook for reviewing mergers and von der Leyen’s desire to pick European winners. The joint venture would compete with overseas players on satellites for commercial telecommunications. However, it would face scant competition for military and public procurement tenders in the EU, for example with the European Space Agency (ESA). These are typically restricted to home-grown bidders. Rolf Densing, ESA’s director of operations, has voiced concerns that the deal would leave the agency with limited options for sourcing satellite contracts. Germany’s OHB would be left as its last remaining competitor. OHB’s CEO Marco Fuchs has warned that the deal threatens to create a monopoly that would harm customers and European industry. That could herald a rerun of the tensions that the Commission faced when it blocked a Franco-German train industry merger between Siemens and Alstom in 2019 — although today the political environment is more favorable to the companies.  The Commission’s competition directorate is under pressure to broaden its views on mergers to take into account the bloc’s wider push for growth and an increased capacity to compete with U.S. and Chinese players. A review of the bloc’s merger guidelines is due next year, according to the Commission’s latest work program. Alexandre Léchenet in Paris and Tom Schmidtgen in Berlin contributed reporting.