PARIS — Aerospace firm Safran is in exclusive talks to buy French defense artificial-intelligence startup Preligens, whose algorithms are used to analyze satellite data for the French and U.S. militaries, for an enterprise value of €220 million, or $236 million.

Safran said the potential deal is a “unique opportunity” to add cutting-edge AI to its product offering. The transaction is subject to the usual regulatory approvals, and is expected to close in the third quarter of 2024, the Paris-based company said in a statement on Monday

“The proposed acquisition of Preligens will boost the adoption of AI within the group,” Safran CEO Olivier Andriès said in the statement. “It will represent a step-change for our defense and space technology businesses.”

The acquisition would ensure French control of a technology that the country’s Armed Forces Ministry has identified as crucial in the competition between global powers. The French government owns 11.2% of Safran and 18.1% of voting rights. Other bidders for Preligens included Sweden’s Hexagon and the Leonardo-Thales joint venture Telespazio, Les Echos reported in April.

The Preligens AI has been trained specifically for detecting military equipment such as armored vehicles, aircraft and ships on satellite or drone images, and France’s military intelligence uses the technology to monitor activity at strategic sites. The startup also works with NATO, the U.S., the U.K. and the EU, and last month announced a new contract with an Asia-Pacific customer for AI analysis of high volumes of government satellite images.

The startup was approached in 2020 by the CIA-sponsored investment fund In-Q-Tel, prompting French government-owned defense investment fund Definvest to participate in a €20 million funding round that same year to keep ownership fully in France. The French armament agency DGA signed a framework contract for AI analysis with Preligens in 2022 with a value of as much as €240 million over seven years.

France in March announced plans to reallocate €2 billion of funding from its 2024-2030 defense budget to artificial intelligence. Armed Forces Minister Sébastien Lecornu last week announced plans to build Europe’s most powerful classified supercomputer to take the lead in AI for defense purposes, saying France will be the European power that will devote most resources to military AI.

Preligens had sales of €28 million in 2023 and employs about 220 people, including 140 engineers in research and development. The company’s products include Xerus, which uses AI to map terrain for military purposes such as mission planning, and Robin, which provides AI-based monitoring of activity at strategic sites such as air bases. The Paris-based startup is also working with the French Navy on AI-powered analysis of underwater acoustic signals.

Adding the Preligens technology will allow Safran deploy AI-enabled digital inspection focused on flight safety and quality, the company said. Safran gets more than three-quarters of its revenue from civilian aerospace.

Safran Electronics & Defense presented an AI solution called Advanced Cognitive Engine (ACE) at the Eurosatory defense show here last week, adding AI-based target detection and tracking to the company’s optronics for land vehicles, naval sights and aircraft. The company plans to integrate ACE with its drones and robotic systems.

Preligens was founded in 2016 by Arnaud Guérin, a former executive at French government-owned nuclear-power technology firm Areva, and Renaud Allioux, previously an engineer at Airbus Defence and Space focusing on remote sensing for Earth observation.

Rudy Ruitenberg is a Europe correspondent for Defense News. He started his career at Bloomberg News and has experience reporting on technology, commodity markets and politics.

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