BAE Systems/EADS potential merger

[1805]

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.

 

[colay]

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." [

 

[RobWilliams]

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?

 

[colay]

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.