Open

Coming up

Don't miss

Replay


LATEST SHOWS

WEB NEWS

NYPD's online campaign backfires

Read more

ENCORE!

Celebrating the Bard's birthday in Britain

Read more

TALKING EUROPE

José Bové, Candidate for the EU Commission presidency, Group of the Greens

Read more

THE INTERVIEW

Yuki Tatsumi, Senior Associate of the East Asia Program, Stimson Center

Read more

INSIDE THE AMERICAS

USA: Executions halted over drugs secrecy

Read more

IN THE PAPERS

An overly optimistic plan?

Read more

IN THE PAPERS

#NYPD Fail

Read more

BUSINESS DAILY

Soaring iPhone sales in China boost Apple earnings

Read more

AFRICA NEWS

Tutu cautions ANC: South African peace laureate criticises ruling party

Read more

  • Ukraine troops launch assault on rebel stronghold, take checkpoint

    Read more

  • Afghan guard kills US doctors in Kabul hospital attack

    Read more

  • Ségolène Royal denies banning cleavage at French ministry

    Read more

  • Palestinian unity deal stirs anger in Israel

    Read more

  • Video: Mayor in east Ukraine ready ‘to turn Slaviansk into battlefield’

    Read more

  • US would defend Japan in islands dispute, Obama says

    Read more

  • New far-right mayor moves to quash Paris region mosque

    Read more

  • US soldiers arrive in Poland as Ukraine crisis continues

    Read more

  • Fatah, Hamas agree to form Palestinian unity government

    Read more

  • Millions of Syrians desperately need aid, says UN

    Read more

  • Muslims in CAR pray for an escape route

    Read more

  • Madrid beat Bayern 1-0 in first leg of Champions League semis

    Read more

  • Britain's ex-PM Blair warns against spread of radical Islam

    Read more

  • Turkish PM offers condolences to descendants of Armenians killed in 1915

    Read more

  • Gay marriage, one year on: ‘French civilisation did not crumble’

    Read more

  • Colombian president reinstates firebrand Bogota mayor

    Read more

  • NYPD public relations campaign on Twitter goes awry

    Read more

  • In pictures: Violent protests erupt in Rio

    Read more

Business

EADS, Britain's BAE in talks on possible merger

©

Latest update : 2012-09-13

British defence contractor BAE Systems and European plane maker EADS said Wednesday they were in talks on a possible merger that would create "a world class international aerospace, defence and security group" that could better rival US giant Boeing.

British arms manufacturer BAE Systems and European planemaker EADS revealed Wednesday they are in merger talks to create a global aerospace and defence leader that would better rival US giant Boeing.

"BAE Systems plc and EADS confirm that they are in discussions regarding a possible combination of their businesses," the companies said in a joint statement that confirmed feverish market speculation.

The talks envisaged BAE Systems owning 40 percent of the enlarged group, with EADS holding a majority 60-percent stake.

"The potential combination would create a world class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA," it added.

The new group would manufacture products ranging from Airbus passenger jets and military transporters to Challenger tanks, Tornado jet fighters and aircraft carriers.

The merged company would have a unified board and management structure with identical boards and executive committees at each of BAE and EADS.

"This potential combination would be implemented through the creation of a dual listed company structure, under which both companies would operate as one group by means of equalisation and other agreements but would be separately listed on their existing exchanges," the statement added.

The two groups have a history of collaborating. They are already partners in joint ventures including the Eurofighter project and MBDA missile systems.

BAE is an expert in the field of defence, security and military, whereas most of EADS's work is in the commercial sector with its Airbus jet division.

A merger would help EADS make headway in the United States, which until now it has struggled to do, Guy Anderson, Senior Principal Analyst at IHS Jane's Defence Industry said.

"BAE systems now is far bigger in the US than it is in Europe" he pointed out.

In Washington, Boeing's chief Jim McNerney said Wednesday they saw no threat from the planned proposed merger.

"I have a pretty deep and abiding faith in our company's strength, okay, so I don't see this as something that is going to threaten us fundamentally," he said.

"I think this may be a matter of, from an EADS standpoint, maybe some increased US market access" because of BAE's presence in the United States.

Under the plan being discussed, the two groups would issue special golden shares in BAE Systems and EADS to each of the French, German and British governments.

This would replace Britain's stake in BAE Systems and the Franco-German stakeholder arrangement in EADS, the pair said.

EADS would pay £200 million to its shareholders prior to completion of a transaction.

Both groups said Wednesday that they have held talks with a "range" of governments across the world over the proposed deal.

"BAE Systems and EADS operate highly secure and sensitive defence businesses in the USA, the UK, France, Germany, Spain, Saudi Arabia and Australia, amongst other countries," they said.

"Discussions have therefore been initiated with a range of governments about the implications of the potential transaction."

In a separate development, Britain said any merger between the two groups would have to protect the public interest.

"The business benefits of any such arrangements are a matter for the companies involved," a British government spokesman said. "Given the nature of the companies' activities we would of course want to ensure that the UK's public interest was properly protected."

France's government would give its view once it knew the details of the deal, French Finance Minister Pierre Moscovici said in a statement.

BAE and EADS added that they had agreed to ringfence certain defence activities, especially in the United States.

"Under the transaction structure being discussed... BAE Systems and EADS envisage that certain of their defence activities would be ringfenced with governance arrangements appropriate to their strategic and national security importance, particularly in the USA, given the importance of that market to the enlarged group," the statement added.

News of the proposed deal, which remains subject to shareholder approvals, sent BAE shares surging -- but EADS stock dived.

BAE shares rocketed 7.39 percent to 353 pence on London's FTSE 100 index of leading companies, which finished 0.17 percent down at 5,782.08 points.

In Paris, EADS stock sank 5.63 percent to 28 euros on the CAC 40, which ended up 0.18 percent at 3,543.79 points.

In recent years, BAE Systems' performance has been hit as military budgets were cut in Britain and in the US and has axed 22,000 jobs over the past three years in response to reduced military spending around the world.

(AFP)

Date created : 2012-09-13

  • AVIATION

    Boeing trumps EADS' bid for US Air Force refuelling contract worth €25 bn

    Read more

  • France

    Daimler, EADS charged with insider trading

    Read more

  • UNITED KINGDOM

    BAE to pay 450 million dollars in fines to settle corruption charges

    Read more

Comments

COMMENT(S)