French conglomerate Safran said it had received a 383 million euro ($550 million) offer from U.S private equity firm the Gores Group for its Sagem Communications arm.

Safran has been the subject of rumors linking it to a possible merger with French defense electronics group Thales, and the sale of Sagem Communications might facilitate an eventual deal with Thales or another company.

Safran emerged from a 2004 merger between aerospace group Snecma and telecom equipment firm Sagem. However, the new company soon faced losses at Sagem units, problems with the weakness of the U.S. dollar and internal management turmoil.

Sagem Communications, part of Safran's 'Communications' branch, offers broadband and convergence solutions, including printing terminals, digital TV set-top boxes, broadband and residential terminals, and telecom systems and partnerships.

The company has 6,500 employees and had revenues of 1.3 billion euros in 2006.

Safran said Gores Group was buying Sagem Communications for an enterprise value of 383 million euros.

It added that the deal should be finalized in coming months following consultation with staff organizations.

We sought a solution that would ensure the best possible future for Sagem Communications and its employees, and would also protect the interests of its customers and of Safran shareholders, said Safran Chief Executive Jean-Paul Herteman.

The Gores Group provided the best guarantees from this point of view. And with this new shareholding structure, Sagem Communications will enjoy the conditions for further growth that it deserves, he added.

The Gores Group said Sagem Communications had good growth potential.

Sagem Communications already holds strong positions in promising high-tech markets, a specialty of our investment group. We are convinced that Sagem Communications harbors excellent growth potential, and we intend to provide the resources needed to support this development, said Gores managing director Steve Yager.

The Gores Group was founded in 1987 and is headquartered in Los Angeles. Its current private equity fund has committed equity capital of $1.3 billion.

Safran shares closed down 1.3 percent at 17.77 euros on Friday, giving Safran a stock market value of around 7.4 billion euros. The stock has risen by around 1 percent since the start of 2007, underperforming a 4 percent gain in the broader French SBF120 index.