Euro could fly

12 September 2012 By Quentin Webb

Civil aviation and defence both are cyclical businesses. But marrying EADS, the continental outfit behind Airbus, with UK defence giant BAE should yield a stronger combined group. Cost savings will be limited, and the terms favour BAE. But EADS becomes a less political animal.

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BAE Systems and EADS said on Sept. 12 that they were in talks about combining via a “dual-listed company structure”. The combined group would be worth about $48 billion and would overtake Boeing as the world’s biggest aerospace and defence company by sales.

The planned merger would give BAE’s shareholders 40 percent of the combined group, while the British, French, and German governments would each be given “special shares”. The duo, who already collaborate on projects such as the Eurofighter, said they expect to make cost savings in areas such as procurement, and to benefit from “substantial new business opportunities”.
News of the merger talks was reported earlier on Sept. 12 by Bloomberg News.

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