Commentary

October 3, 2012

BAE, EADS blast merger ‘myths and misconceptions’

The chief executives of BAE Systems PLC and EADS NV sought to drum up support Oct. 1 for the merger of their two aeronautics and defense companies in the face of growing criticism to the deal, saying in a joint newspaper article an agreement would help both organizations grow.

The deal would create a global aerospace and defense giant with combined sales of more than $90.3 billion and more than 220,000 employees. However the sector is facing challenges and uncertainties amid cuts to government defense budgets on both sides of the Atlantic.

French media company Lagardere, which owns a 7.5 percent stake in EADS, urged company management Oct. 1 to reconsider the project, “taking better into account the overall interests of the French controlling shareholders in EADS.”

“Despite the industrial and strategic potential it is said to have, has not proven so far that it would be a value creator for EADS,” Lagardere said in a statement. “Lagardere considers that the conditions for joining EADS and BAE together are unsatisfactory at this stage.”

In a joint article written by BAE’s Ian King and EADS’ Tom Enders and published in several newspapers across Europe, the two CEOs said they could not spell out full details on the ongoing negotiations, but that they felt it “important to correct some myths and misconceptions.”

“The first thing to say is that this is a combination borne out of opportunity, not necessity…” the two wrote in the editorial, published in Britain, France and Germany.

“We believe that the time is now. With the necessary political will and support, management determination and proper governance, BAE Systems and EADS can produce a whole that is greater than the sum of its parts.”

EADS is already one of Europe’s biggest companies, parent to aircraft maker Airbus, helicopter maker Eurocopter, satellite builder Astrium and defense electronics contractor Cassidian.

Airbus and EADS have long been rivals to U.S.-based Boeing in civil and defense aviation. The proposed deal is a clear shot at catching up to Boeing’s defense business – and passing it.

The U.S. and European firms have fought ruthlessly in the courts over government subsidies, and competed for years for a huge contract to build new aerial refueling tankers for the U.S. Air Force, a contract Boeing finally won.

EADS is jointly French and German-owned – though incorporated in the Netherlands – with dual headquarters in Munich and Paris as well as the Airbus headquarters in Toulouse, France.

Germany’s Daimler holds a 22.5 percent stake in EADS, the French government owns 15 percent and French media company Lagardere has 7.5 percent.

Enders and King said they were working hard with the respective governments on the merger.

“We are very focused on agreeing to arrangements which protect the strategic and national security interests of the governments with which we work, particularly in France, Germany, the United Kingdom and the United States, given the importance of those markets to the combined group,” they wrote.

“We propose to replace the shareholder arrangements which currently give Daimler, Lagardere and the French state joint control over EADS. That would mean creating a business with governance structures which would enable it to operate in a normal commercial manner.”

 




All of this week's top headlines to your email every Friday.


 
 

 

Headlines January 28, 2015

News: Panel will propose new military retirement system - The long-awaited report on military compensation set to drop Thursday will propose fundamental changes to military retirement and health care benefits, according to several people familiar with the report. Source: DOD to request $585 billion for fiscal 2016 - The Department of Defense is preparing to submit a...
 
 

News Briefs January 28, 2015

Defense contractor to pay $2 million to settle claims A Northern California defense contractor will pay the federal government $2 million to settle claims about its manufacturing of parts for remote-controlled aircraft. The U.S. Attorney’s Office in Sacramento says Sacramento-based Composite Engineering Inc. agreed to pay the money to end allegations that it artificially inflated...
 
 
Navy photograph

USS Roosevelt marks 200,000 trap

Navy photograph An F/A-18F Super Hornet flown by Capt. Daniel Grieco, commanding officer of the aircraft carrier USS Theodore Roosevelt (CVN 71), and Capt. Benjamin Hewlett, deputy commander of Carrier Air Wing (CVW) 1, complet...
 

 
Navy photograph by PO1 William Larned

USS California returns from maiden deployment

Navy photograph by PO1 William Larned The Virginia-class attack submarine USS California (SSN 781) returns from its maiden deployment to its homeport at Naval Submarine Base New London. Under the command of Cmdr. Shawn Huey, Ca...
 
 
Army photograph

Army proves new watercraft capabilities

Army photograph Marine Corps assets are loaded onto the USNS Sgt. Matej Kocak (T-AK 3005), from an U.S. Army Landing Craft Utility, or LCU, USAV Port Hudson during port operations, at White Beach Naval Base, Jan. 22, 2015. Sold...
 
 

Orbital stockholders approve merger with ATK’s aerospace, defense groups

Orbital Sciences Corporation announced Jan. 27 that at a special meeting, the company’s stockholders voted overwhelmingly to approve the proposed merger with the Aerospace and Defense Groups of Alliant Techsystems Inc., pursuant to the definitive transaction agreement dated April 28, 2014. Approximately 99 percent of the votes cast at the special meeting voted in favor...
 




0 Comments


Be the first to comment!


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>