PARIS (Reuters) - France's Thales (>> THALES) moved quickly on Wednesday to overcome a snub by one of France's leading businessmen, asking its chief executive to lead the board after Henri Proglio refused to accept the chairmanship of Europe's largest defence electronics group.

The surprise decision by Proglio to walk away from the non-executive job scuppered a plan to split the two senior roles that was designed to smooth relations between the French state and industrial shareholder Dassault Aviation (>> DASSAULT AVIATION).

Chief Executive Patrice Caine, who had also served as chairman on a temporary basis while preparing to cede that role to Proglio on Wednesday, was confirmed in both positions.

"I am very confident in the future of Thales," he told shareholders, adding he expected further rises in orders from emerging markets in 2015 after a 40 percent gain in two years.

Shares in Thales rose 1.8 percent to 54.54 euros (£39.37).

Proglio announced his withdrawal on the eve of the company's shareholder meeting, exposing a rift with Economy Minister Emmanuel Macron over his Russian interests.

Macron had asked the former boss of power utility EDF (>> EDF) to cut his ties with state-owned Russian nuclear company Rosatom if he wanted the Thales role.

But Proglio announced he would not take the chairman's job and accused Macron of treating him like a "spy".

The head of Dassault Aviation, which shares control of Thales with the government, hit out at the timing of Proglio's decision.

"It's his decision and we have to respect it. What I regret is its belated form," Eric Trappier told Reuters.

'PRAGMATIC' SOLUTION

Proglio's departure upset a succession plan negotiated after the last unexpected resignation just six months ago.

Jean-Bernard Levy had quit after less than two years as chairman and chief executive to replace Proglio as head of power firm EDF.

The agreement called for Caine, nominated by the government, to become CEO but to fill in as chairman until Proglio, Dassault's preferred candidate, was appointed.

At a board meeting on Wednesday, the two core shareholders decided to prolong the temporary arrangement.

"When you plan to separate two roles you need people ready to fill them, otherwise you are just creating pigeon-holes. It is a question of pragmatism: today Proglio isn't there, so Patrice Caine remains both CEO and chairman," Trappier said.

Asked whether the unified structure would remain in place, he said, "That's the structure we have today."

Several individual shareholders called for more stability.

"You are the fourth chairman I have seen," one investor told Caine. "I hope this wave of presidents will soon stop."

Asked whether Thales would now see a period of greater calm, Trappier said, "That's what we have been hoping for a very long time. I don't have any particular worries."

Thales meanwhile told shareholders that Levy, drafted in to replace an ousted Thales boss in December 2012, had received no pay-off because he had not stayed at the company long enough.

(Additional reporting by Emelia Sithole; Editing by Keith Weir)

By Tim Hepher

Stocks treated in this article : THALES, EDF, DASSAULT AVIATION