Posted on 09/06/2006 1:02:14 PM PDT by alnitak
UK-based defence firm BAE Systems has agreed to sell its 20% stake in plane maker Airbus to EADS for 2.75bn euros (£1.87bn; $3.53bn).
BAE estimates the sale will generate about £1.2bn net, allowing it to return about £500m to shareholders.
If shareholders agree to the deal, pan-European EADS, which owns 80% of Airbus, will own the firm outright.
The 13,000 Airbus workers in the UK - where the planes' wings are built - are not thought to be affected by the deal.
"The board believes that Airbus is facing a challenging short to medium-term outlook," BAE said.
The firm can sell its 20% stake after a 2001 deal it signed with Franco-German EADS.
BAE's decision comes after an independent audit by Rothschild, which valued Toulouse-based Airbus at £1.9bn.
BAE said it thought "a significant amount of management focus, time and investment would be required to address the issues currently facing Airbus".
Delays
The company said if the sale does not go ahead "it may be necessary to retain BAE Systems' interest in Airbus for an extended period to be confident that it could be sold for materially more than [the current price]"
Reports have suggested BAE had hoped to earn more by selling its share in Airbus.
Back in April BAE Systems first said it was thinking of withdrawing from the pan-European aircraft-maker.
But when BAE and EADS failed to reach agreement on a price for the sale, Rothschild was engaged to value Airbus.
Since then however, Airbus has seen development of its new Airbus A380 super-jumbo suffer delays.
Shares in BAE fell 0.92% to 377.5 pence while shares in EADS dropped 1.13% to 22.79 euros.
The deal remains to be approved by BAE shareholders.
For comparison, Vodafone's capitalization can easily go up and down by that much in one day.
Hi, err, slight posting error...need to change the title to "BAE agrees to £1.87bn Airbus sale" and make the current title the hyperlink. TIA.
Did you just do that already or was there a glitch in the Matrix ? :-)
I fixed it.
rats leaving the sinking ship.
Something tells me this is the first step toward a merger of BAE and Boeing.
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