Posted on 06/08/2003 10:18:37 AM PDT by budanski
BAE Systems has informed the Government that it is planning a giant transatlantic merger with one of its US defence rivals, either Boeing or Lockheed Martin.
The UK's biggest defence company has made it clear that its future lies in North America and has discussed the implications in recent weeks with Patricia Hewitt, the trade and industry secretary, and Geoff Hoon, the secretary of state for defence.
A mega-merger is expected later this year, according to executives of the company. One said: "BAE has always said there will be more consolidation and that it would be part of that. It will be in at the end game.
"The company has to grow in the US. That is where the market is and the money is. It is where the research and technology really happens and where people have budgets. A deal could quite easily happen sooner rather than later."
Boeing is said to be the preferred partner of Sir Dick Evans, the chairman of BAE, although BAE would be very much the junior in such a relationship. Boeing's £22bn valuation dwarfs BAE.
A deal with Boeing would also create a serious conflict of interest: BAE owns a 20 per cent stake in Airbus, the European commercial aircraft company that is Boeing's arch rival.
Last week Philippe Camus, the chief executive of EADS, which owns 80 per cent of Airbus, warned that BAE would have to dispose of its stake in Airbus should it merge with Boeing. Analysts say EADS is very concerned about the effect of any tie-up with Boeing, which would give the Americans a huge boost in the European market.
Analysts say that Lockheed, with which BAE works on the Joint Strike Fighter programme, would be a more logical fit for the UK company. General Dynamics of the US is also seen as a potential suitor.
BAE's share price rose sharply last week when Mike Turner, the chief executive, was reported in an analyst's note as having said that any deal need not necessarily be on a 50/50 basis (or that BAE could only merge with a business approximately the same size as itself).
The comments fuelled speculation that a full takeover of BAE is on the cards. According to one BAE source: "We have never been prescriptive. We have never said that the deal we might do would have to be on a 50/50 basis."
BAE's shares rose to a six-month high of 148p, bringing the company's market capitalisation to £4.5bn.
The Government has no ideological objection to BAE merging with a US giant, especially in the wake of the joint US/UK military action in Iraq.
Don't count on it.
Dubya favors international control of industries vital to our national security.
I think you're referring to the BAe 156 regional airliner. The early versions were much-disliked due to the poor reliability of the engines and the fact the plane was a bit underpowered. It wasn't until the Lycoming jet engines were upgraded that the later versions (sometimes known as the Avro/BAE RJ85) were better-liked by both pilots and passengers.
Anyway, if BAE Systems merges with Boeing it will have some very interesting effects on the airliner industry. This is because BAE Systems has a division that produces wings for the Airbus A330/A340 and the upcoming A380 airliners; will Boeing ownership mean possible political problems in wing development for future Airbus planes?
I'm (sort of) kidding, but I recall that in some movie there was only one restaurant surviving...I think it was Taco Bell.
--Boris
More expensive than a real jet, lower opperating ceiling than a Dash-8\Q400
I would imagine the ONLY reason any of them are flying is because the lease terms are very favorable, otherwise they would be parked in the desert and leasing them at giveaway prices is better than parking them for good.
In other British Aviation (oxymoron?) news, the Nigerians have grounded the 1-11 citing it as a death trap
Not to mention it's involvement with Airbus
At the same time, I don't think the British government would be esspecially pleased to see BAe disappear and both governments could claim national security as a reason to veto
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