A MULTI-BILLION pound merger was today announced by major East Lancashire employer Lucas Industries.

The news that Lucas is to join forces with the American Varity Corporation in a £3.2 billion deal ended weeks of speculation and was given a cautious welcome by a local union representatives and MPs.

The merger will make the firm's factories in Burnley and Accrington, which together employ almost 2,000 people, part of one of the world's largest motor component manufacturers.

The combined group, to be called LucasVarity, will have a stock market value of £3.2 billion and rank as the UK's 64th biggest company.

Lucas chairman Sir Brian Pearse, who will become the non-executive chairman, described the deal as excellent for both companies.

Shareholders in Lucas, the larger of the two companies, will end up with 62 per cent of the enlarged group with existing Varity shareholders holding the rest.

Union convenor at Lucas Aerospace Fabricated Systems in Burnley, Terry Burns, today said he was hopeful the merger would not affect the local workforce. "We have had no indication that there would be any job losses. The local Lucas factories are viable operations which have some very good orders on the books so I can't see any reason why they should be affected,"

Earlier this month Lucas Aerospace won a £33 million order with Ford to manufacture fuel containers manufactured in Burnley.

And Mr Burns said a merger would be better received by the workforce than a takeover.

"There is a concern that they might consider selling off the aerospace side of the business but that is doing well at the moment. It is early days yet and we'll just have to see what happens."

Local MP Peter Pike, who is in regular contact with Lucas management, said he would be seeking a meeting with the company over the merger.

"I can understand why the company has decided on this merger. They are operating in a world market and if you want to be a big player you have to be of a major size," said Mr Pike.

And Mr Pike said the local factories' achievements recently would stand them in good stead under any restructuring.

"They are in a much stronger position now than they were a few years ago. There have been exciting developments on both the aerospace and automotive site.

"I can understand that workers may have some concerns about the future in this kind of situation and I will obviously be raising those with Lucas management."

Shares in Lucas rose by 12p to £2.44 shortly after the announcement.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.