European aerospace concern EADS and British military equipment maker BAE want to merge, creating a giant equal to Boeing. This will allow EADS to reduce dependence on Airbus, and BAE — from defense contracts. Exchange reacted to the news falling shares of companies: European giant could lose South American arms market.
European Aeronautic Defence and concern EADS in talks to merge with British arms manufacturer BAE Systems. This was told by representatives of both companies. EADS and BAE revive plans 10 years ago to develop a giant equal American company Boeing, says Bloomberg: in an era of defense budget cuts the company will balance between civilians and military orders.
It is understood that EADS will receive 60% of the new group, BAE — 40%.
The market price of the company could reach $ 45-48 billion (at Boeing — about $ 40 billion), with sales — $ 100 billion, staff — about 220 thousand people.
European giant will create a civilian aircraft (EADS comes in Airbus), combat aircraft Eurofighter, helicopters, nuclear submarines of cosmic satellites and missiles.
Negotiations between EADS and BAE started early June, when the new CEO of EADS Tom Enders, who led before Airbus, went to work (it was approved by the Board of Directors of the concern first year). In 1998, he failed to connect with the company BAE Dasa (then aerospace division of concern Daimler). The failure of the transaction resulted in a couple of years to the creation of EADS.
The British company has come to the decision to merge with European concern in anticipation of a sharp decrease in defense orders — EU countries reduce defense spending after the end of the war in Iraq and reducing the presence in Afghanistan. In 2011, fighter Eurofighter Typhoon (cooperative project with EADS and Finmeccanica) lost to Indian tender worth $ 40 billion to the French Rafale.
In July in Munich accomplished a meeting at which the merger was approved by the scheme: 40 to 60, said a source Bloomberg. But the deal has not yet been promised, they say sources Reuters. Need to calculate not only the economic consequences of the transaction, and «regulatory and cultural prepyadstviya also ensure secrecy technology.»
BAE is a supplier to programm military and commercial aircraft Boeing. English company manufactures flight control system for tiltrotor Bell V-22 Osprey, touch control panel Boeing 737, the control system for power plants Dreamliner. But Boeing President Jim McNerney told reporters that the union of EADS and BAE «not fundamentally threatens us.» «I firmly believe our company is capable of,» — he explained, noting that the merger of EADS and BAE reflecting the trend towards global consolidation of productive assets. In 1997, Boeing acquired McDonnell Douglas company for $ 16.3 billion.
BAE in 2011 fiscal year — the ninth volume of orders U.S. government contractor — the amount of contracts is $ 7.3 billion. At EADS orders from the South American government did not exceed $ 684 million
BAE South American supplies MoD fighting vehicles, means of artillery, naval guns. EADS makes helicopters for the U.S. Army UH-72 Lakota in 2011 and lost to the Boeing Company in the tender price of about $ 35 to develop a new tanker for the U.S. Air Force. But EADS merger with British BAE wished to throw the right to sell their products in the South American arms market regardless of the combined company.
French government owns 15% stake in EADS. German carmaker Daimler holds the key 22.5%, of which 7.5% is owned by the federal states of Germany and some German banks. The Spanish government has 5.4%. Representatives of Daimler said the company as before wants to reduce its role in EADS this year (previously excluded that the shares will be bought by the German government).
Following the announcement of the merger likely EADS shares on the Paris stock exchange fell by 10%. BAE shares fall on the English Exchange — 9.2%.
The market reacted to the difficult nature and not likely enough to calculate the consequences of the transaction, according to analysts. Companies are working on the world’s largest defense market — the U.S. market, and the merger may affect their presence in this sector.