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BAE Systems/EADS potential merger

This is a discussion on BAE Systems/EADS potential merger within the Geo-strategic Issues forum, part of the Global Defense & Military category; BAE's US operations are effectively firewalled from the parent UK company. So I don't see this as a show-stopper to ...


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Old October 9th, 2012   #16
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BAE's US operations are effectively firewalled from the parent UK company. So I don't see this as a show-stopper to the merger as the same arrangement can simply be maintained.
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Old October 10th, 2012   #17
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BAE's US operations are effectively firewalled from the parent UK company. So I don't see this as a show-stopper to the merger as the same arrangement can simply be maintained.
If that's true, care to explain why there's such an issue about it then? Or are all the people who have serious concerns about BAE's US market (a fair few who also coincidentally have financial stakes in BAE and as such are motivated by profit rather than politics) wrong, if the risk is non-existant?
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Old October 10th, 2012   #18
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OK, I'll bite...

VT contracts are / were the most wonderfull, bestest things on planet earth !























...Now that everyone else who is in the business, or actually reads the papers / surfs the net has stopped laughing & rolling on the floor, can I just clarify one thing.

IF VT were SOOooooooo Good at shipbuilding, why.....

#1. ...did they sell off their Maritime / shipbuilding business?

#2. ...did they give back over 50 M to BAE, AFTER the sale had been approved, went thru & BAE had coughed up the 300M ???


(....go away & research those two questions, then come back with a factual answer backed up with extracts from the web, rather than a personal opinion).





With ALL DUE RESPECT, have you ever looked at the history of British shipbuilding over the last 40 years ??

Are you aware of how many shipyards / builders there were in 1980 & how many were left in 2000 ?

Add to that, how many are actually still in business NOW ??

Like it or not, BAE have helped to save an Industry & a skills base that successive governments didn't give a rats ass about.

10 years after they took over 'stewardship' of the Maritime business, it's still here , still building ships & still growing.

Personally, I'd call that a success in this climate.




Rant over...


SA
VT merged and effectively gave up on shipbuilding because it was financially benefial for it's shareholders (and managment team which did very well). However the direction was clear, the Government wanted one defence shipbuilder.

There were compensation issues with ships under construction by VT, these are very modest in comparison to some of the delays BAE have had...but then the MOD picks up the bill. The VT facility at Portsmorth was new and considered state of the art.

I don't think you could say BAE have saved defence shipbuilding all they have done is work on RN orders? In fairness the rot set in before BAE acquired the business, but has shown little interest in export until recently. But the long list of German, Spanish, French & Italian exports is very telling. Productivity has played an issue but lack of good products has been the real issue. A success well....I'm not sure I would call it that.
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Old October 10th, 2012   #19
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Merger canned:


BBC News - BAE-EADS merger cancelled amid political impasse


Probably for the best.

The two should perhaps seek closer business ties for the future,

Ian
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Old October 10th, 2012   #20
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Merger canned:

[snip]

Probably for the best.

The two should perhaps seek closer business ties for the future,

Ian
Personally I thought they were going to request more time, but I can't say this was unexpected by any measure.

The interesting thing in that article is that it says "Germany was fundamentally opposed", i'd have thought it would have been a more French orientated affair.

EDIT: According to the Telegraph, the UK and France were both in favour of the idea

http://www.telegraph.co.uk/finance/n...ga-merger.html

Then this speaks volumes about who would've really gained if it took place

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BAE shares fell 2% in London trading as the news broke, while EADS shares jumped 3%.
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Old October 10th, 2012   #21
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Personally I thought they were going to request more time, but I can't say this was unexpected by any measure.

The interesting thing in that article is that it says "Germany was fundamentally opposed", i'd have thought it would have been a more French orientated affair.

EDIT: According to the Telegraph, the UK and France were both in favour of the idea

BAE and EADS ditch 28bn mega merger - Telegraph

Then this speaks volumes about who would've really gained if it took place
I was listening to the BBC comments and it is interesting to see their view on the drivers of the various parties:

- Apparently the BAE board were keen, with their concern about the heavy defence exposure with a declining outlook
- UK Government very keen to regain some influence via BAE shareholding over the UK jobs in EADS.
- Quite a few major BAE shareholders not keen
- German government fundamentally against, because they were not prepared to have a smaller holding than the French.

With the merger now off, I don't know where that leaves BAE, they could: try again later, go more US maybe even merge with a big US group or stay independent and rationalise/try organic growth. Maybe they should look for at a more balanced merger with an view to the future...Embraer?

Either way I think it would be good for UK MOD & BAE to separate off the marine business, the money could be used to support an merger and the activity is not that attractive to aerospace companies.
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Old October 10th, 2012   #22
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If that's true, care to explain why there's such an issue about it then? Or are all the people who have serious concerns about BAE's US market (a fair few who also coincidentally have financial stakes in BAE and as such are motivated by profit rather than politics) wrong, if the risk is non-existant?
A moot point perhaps now that the deal has been scuttled but here's something from,Wiki:


Linda Hudson was appointed Chief Operating Officer, BAE Systems plc, and President and CEO of BAE Systems Inc. on October 26, 2009.

As per its Special Security Arrangement, BAE Systems Inc. operates as a semi-autonomous business unit within BAE Systems controlled at a local level by American management. In May 2006 the CEO of BAE Systems described the "firewalled" status of BAE Systems Inc: " The British members of the corporate leadership, me included, get to see the financial results; but many areas of technology, product and programme are not visible to us.... The SSA effectively allows us to operate in the US as an American company, providing the highest levels of assurance and integrity in some of the most sensitive fields of national security provision." [
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Old October 10th, 2012   #23
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That is true, but - again - i'd very much like to hear your thoughts on why (this being the case) it was considered a major point against the merger?
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Old October 11th, 2012   #24
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That is true, but - again - i'd very much like to hear your thoughts on why (this being the case) it was considered a major point against the merger?
OK, I'll give it a shot..
Perhaps there were some commercial interests that possibly felt threatened by the proposed merger and did not like the idea of going up against a bigger, stronger competitor? So it could have been a PR campaign intended to create FUD and perhaps generate a scenario where their friends in Washington might intervene to throw a monkey wrench in the works?
Given that the existing safeguards on BAE North America have been accepted for many years now, it would have been a simple matter of implementing additional security measures to address concerns of EADS involvement. I don't think there was a serious risk of Washington vetoing the merger based on safeguarding tech secrets.
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