Industry has been consolidating

The two firms have been working closely for some years on the development of the EH101 helicopter, now in service with the Royal Navy.

They announced the merger plans in March 1999, having begun talks the previous year.

The new company - to be called Agusta Westland - is expected to become fully operational in the autumn, subject to regulatory approval.

Westland's chief executive, Richard Case, will be managing director.

Defence market

Westland has a strong presence in the military market, producing a range of army and navy helicopters including the Super Lynx and Apache.

GKN and Finmeccanica will each have a 50% stake in the merged group.

Between them, Westland and Agusta had revenues of £1.5bn ($2.1bn) in 1999.

Westland made a pre-tax profit of about £80m while Agusta made about £47m.