• France edition
 

EADS and BAE aim to create aerospace giant

Published: 13 Sep 2012 09:53 GMT+02:00
Updated: 13 Sep 2012 09:53 GMT+02:00

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 Paris-listed 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.

Don't miss...X
Left Right

Your comments about this article

Today's headlines
Listeria prompts smoked salmon recall in France
Listeria contamination prompts seafood recall. Photo: Screengrab/Fjord King

Listeria prompts smoked salmon recall in France

A French seafood company recalled on Wednesday three batches of smoked salmon because they were contaminated with the dangerous bacteria listeria, which can cause a serious infection in pregnant women and older people. READ () »

French town takes knife fight to president
Villagers have asked the French president to help them get their name back. Photo: Jose A. Torres/AFP

French town takes knife fight to president

Defiant residents of the French village of Laguiole - famous around the world for its knives - have appealed to their president to intervene on their behalf after they lost a trademark battle in court meaning they are barred from using its name on their own products. READ () »

French parents laidback about kids' education
French parents least stressed about their children's future, a new study finds. Photo: Pascal Pavani/AFP

French parents laidback about kids' education

When it comes to stressing about the education of their children French parents are much more relaxed than their counterparts in other countries, a global survey revealed this week. And they are dead against paying for it, it seems. READ () »

France unveils freeze on generous welfare system
Cuts are coming to France's social welfare system. Photo: Patrick Kovarick/AFP

France unveils freeze on generous welfare system

France’s Prime Minister Manuel Valls provided his most detailed account yet on Wednesday of the “collective” cuts France will make to trim its budget by €50 billion, including a freeze on state pensions. The sick, families and pensioners will all feel the pain. READ () »

Pets to no longer be seen as just 'chairs' in France
Animals may soon be considered more than furniture in France. Photo: Danperry.com/Flickr

Pets to no longer be seen as just 'chairs' in France

France took a major step this week towards upping the legal status of animals, which presently sees them classed the same as a chair, a lamp or any old 'personal property'. But cats and dogs will soon be judged as “sentient, living beings”. The change wasn't welcomed by all. READ () »

France OKs first women aboard submarines
France will allow women aboard its nuclear-armed submarines. Photo: Defence Images/Flickr

France OKs first women aboard submarines

The last bastion of exclusively male jobs in the French military fell this week when the defence minister announced a pilot program to allow the first women to serve aboard nuclear-armed submarines. The minister also revealed an action plan to end sexual harassment in the armed forces. READ () »

France mulls plan to tax foreign truck drivers
Will foreign truck drivers soon be charged to take to French roads? Photo: Philippe Huguen/AFP

France mulls plan to tax foreign truck drivers

France’s much-maligned eco-tax charge on lorries that was scrapped late last year, could make a return, this time targeting foreign truck drivers, who could be asked to pay up at the border or even forced through the country's motorway tolls. READ () »

Ex-France international Makélélé faces tax probe
Ex-France international Claude Makélélé, once of Chelsea and Real Madrid faces a tax probe in Switzerland. Photo: Bertrand Langlois/AFP

Ex-France international Makélélé faces tax probe

French tax authorities have asked their Swiss counterparts to start a probe into former France international footballer Claude Makélélé, who played for English club Chelsea and Spain's Real Madrid among others. READ () »

France will stick to EU debt target, minister says
France will stick to EU deficit targets the country's finance minister promised this week. Photo: Joel Saget/AFP

France will stick to EU debt target, minister says

The new French finance minister vowed this week that his country would stick to the tight deficit reduction targets set by Brussels and rubbished speculation that Paris were hoping to persuade the EU to give them more time. READ () »

Dylan hate charge thrown out by French court
Hate charges against Bob Dylan over comments he allegedly said about Croats have been dismissed by a French court. Photo: Mandel Ngan/AFP

Dylan hate charge thrown out by French court

A court in Paris has thrown out a case against US singer Bob Dylan on charges of incitement to hatred filed after he was quoted allegedly comparing Croats to Nazis, his lawyer said on Tuesday. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Business & Money
French tax declarations: The key points to remember
Gallery
French slang: Everyday words you need to know (but use cautiously)
National
Paris cops told to ‘purge’ Roma from posh neighbourhood
International
VIDEO: ‘Anti-French’ Cadillac ad sparks anger in France. See why.
Features
Buying property in France? Here's 10 things you need to think about
National
What will the future map of France look like? The answer lies within.
Politics
'The 27 French regions aren't the problem, it's the 36,000 towns'
Culture
Ex underage call girl Zahia picked to embody Marie Antoinette
Gallery
Buying a house in France? Ten things you need to think about
National
France bans work emails after 6pm! Sadly it's not quite true.
Opinion
Reader Rants: Why don't the French do charity? Is it down to taxes?
Society
VIDEO: The Paris zoo is back but this time the animals are in charge
Advertisement:
National
This will be the most expensive road in France - Only €1.66bn for 12km!
Society
Only in France? Gourmet pensioners party lands village in hot water
National
What's the worst thing to do when you realise you're on the wrong train?
From showers to kissing: Anglos tell Twitter what's weird about France
National
'A big quake will hit France and there will be casualties' - Scientist warns
Culture
After all the dozens of books is France still worth writing about?
Sponsored Article
Why it pays to avoid banks when making overseas transfers
Opinion
Paris or the suburbs - where would you live?
National
VIDEO: Walk the line - crossing the Seine on a tightrope
Society
Innocent dating or pimping? French 'sugar babies' site hit with lawsuit
National
Chef Gordon Ramsay seeks expat Kitchen Nightmares in France
Society
Barking mad? Dog testifies in court in French murder case
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se