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BAE Finally To Sell Out Airbus Stake?  
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Posted (7 years 10 months 4 weeks 1 day 4 hours ago) and read 2934 times:

Most will recall the furore a couple of months ago over the low valuation of BAE's 20% stake in Airbus. BAE opted to carry out an audit of Airbus before making a final decision. This story suggests that, in light of the situation revealed by the audit, BAE will decide to sell out in spite of the low valuation.

"BAE is expected to agree this week to sell its 20 per cent stake in Airbus to EADS, the Franco-German aerospace group for £1.9bn, far less than the valuation ascribed to the holding by its own accountants. City sources say that BAE, under Mike Turner, will hold a board meeting in the next few days to 'decide the issue once and for all'. Turner will act to reassure 12,000 workers at Airbus factories in Bristol and Broughton, north Wales, that their jobs will not be endangered by the move, which is understood to have the backing of the Ministry of Defence.

"A month ago Turner appointed KPMG, the accounting firm, to investigate the reasons behind the low valuation. BAE has not ruled out suing EADS for compensation.

"BAE had decided to sell its Airbus stake before EADS issued a profits warning following delays to its A380 superjumbo programme. The warning depressed the value of the stake, infuriating the UK firm's executives.

"But with serious question marks over the development and cost of the A380, BAE is thought to have concluded that a quick sale is in the best interests of its shareholders because, according to one analyst, 'things will probably get a lot worse at EADS before they get better'."


http://observer.guardian.co.uk/business/story/0,,1863505,00.html

Good news that there are not expected to be any immediate job losses. But the story suggests that the auditors' view of future prospects at EADS/Airbus is not encouraging.


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
15 replies: All unread, jump to last
 
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7391 posts, RR: 17
Reply 1, posted (7 years 10 months 4 weeks 1 day 4 hours ago) and read 2915 times:

Quoting NAV20 (Thread starter):
Good news that there are not expected to be any immediate job losses.

The British government has invested in the R&D of the Airbus wings that are manufactured in the UK. The workers jobs in the two factories are guaranteed while those wings are in production. The medium to long term future may depend on future government R&D investment.

However workers in all Airbus European factories looking in to the longer term may be a little concerned that one of the ways that EADS / Airbus may address the problems that they said at Farnborough they would address would be to start to move some manufacturing to lower cost regions of the world. After all is this not what Boeing is doing with the 787? How many years will it be before all A and B development work is in the US and Europe but most if not all routine manufacture is in the Far East?


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 2, posted (7 years 10 months 4 weeks 1 day 4 hours ago) and read 2902 times:

Quoting VV701 (Reply 1):
. The medium to long term future may depend on future government R&D investment.

True. Whether BAE sells or not, I do not expect any near term job losses. More worrisome for the UK wing work is the Russian interest (i.e., state bank / government investment) in EADS.

Quoting VV701 (Reply 1):
would be to start to move some manufacturing to lower cost regions of the world.

IMO, Airbus is starting to move in this direction with the A320 production in China. This also gives them the opportunity to produce closer to a very large market: Asia.



"When all is said and done, more will be said than done".
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 3, posted (7 years 10 months 4 weeks 1 day 4 hours ago) and read 2893 times:

Oddly enough, the fact that EADS is apparently facing several years of lower profits is likely to cramp their style as far as out-sourcing is concerned, for a while anyway.

The reasons being that, firstly, establishing plants overseas requires big up-front investments; and secondly, given that the immediate future doesn't look too rosy, the unions (especially in France and Britain) will be dead against any suggestion of moving jobs off-shore.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 4, posted (7 years 10 months 4 weeks 1 day 4 hours ago) and read 2882 times:

Quoting NAV20 (Reply 3):
The reasons being that, firstly, establishing plants overseas requires big up-front investments

Mitigated somewhat if the Chinese government foots the bill....  Wink



"When all is said and done, more will be said than done".
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 5, posted (7 years 10 months 4 weeks 1 day 3 hours ago) and read 2875 times:

In the days when, for my sins, I had to try to do business with the mainland Chinese, Lumberton, they never even took their turn paying for lunch.  Smile


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 6, posted (7 years 10 months 4 weeks 1 day 3 hours ago) and read 2875 times:

Quoting NAV20 (Reply 5):
In the days when, for my sins, I had to try to do business with the mainland Chinese, Lumberton, they never even took their turn paying for lunch. Smile

With all respect, lunch is different from buying a ticket to the "big show", NAV20!  Wink



"When all is said and done, more will be said than done".
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 7, posted (7 years 10 months 4 weeks 1 day 3 hours ago) and read 2862 times:

The new plant was very clearly linked, in the press coverage, to that order for 150 X A320s. My guess is that the Chinese assembly plant is very much the quid pro quo for that. So maybe the Chinese feel that they have already committed to their share?


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineLeelaw From , joined Dec 1969, posts, RR:
Reply 8, posted (7 years 10 months 4 weeks 10 hours ago) and read 2737 times:

LONDON (Dow Jones)--BAE Systems PLC Monday declined to say when its board might make a recommendation to its shareholders on whether to sell or retain its 20% stake in commercial airplane maker Airbus.

The Financial Times reported Monday that the board is expected to make a decision on what to recommend shareholders this week.

Earlier this year, BAE triggered a put option to sell its stake in Airbus to 80% owner European Aeronautic Defence & Space Co. NV, but the two sides couldn't agree a price. BAE has said a lower-than-expected EUR2.75 billion valuation put on the stake by independent bank N.M. Rothschild & Sons Ltd. isn't high enough and in July initiated its own full audit of Airbus.

A spokeswoman for BAE Systems Monday told Dow Jones Newswires that the board still intends to make its recommendation on whether to sell the stake based on the results of the audit, but she declined to say when that decision could come. Previously the company had said it didn't expect the audit to be finished before the end of August.

When the board makes its recommendation it will call an extraordinary shareholders meeting at which shareholders will vote on whether to accept a sale at the Rothschild valuation of EUR2.75 billion or to reject the sale and hang on to the stake for the time being...


http://online.wsj.com/article/BT-CO-20060904-701532.html


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 9, posted (7 years 10 months 4 weeks 7 hours ago) and read 2681 times:

Looks as if the 'rumour' is being confirmed from all sides now. Quite refreshing that there has been no innuendo so far from either company; if Forgeard was still around the spin doctors would be hard at work already.

Interesting to see that, of all people, the Russian government seems suddenly to be keen to get involved in EADS/Airbus. 'Business abhors a vacuum..'  Smile:-

"(AP) Shares in Airbus parent EADS rose Wednesday as reports that the Russian bank Vneshtorgbank had bought more than 4 percent of the company went unchallenged for a second day.

"European Aeronautic Defence and Space Co. shares closed 2.2 percent higher at 23.48 euros ($30.10), extending their 1.5 percent rise on Tuesday, when Russian financial daily Vedomosti first reported the acquisition.

"Citing unnamed government and bank officials, the paper said the Russian state-owned institution had acquired between 4.5 percent and 4.8 percent of EADS.

"The move by Vneshtorgbank, if confirmed, comes as EADS is emerging from a crisis of confidence among investors and customers, prompted by more delays to the Airbus A380 superjumbo and a costly redesign of the planned mid-sized A350 jet. The problems at EADS and Airbus led to the departure of two top executives in July.

"EADS shares have since recovered some lost ground but were still 35 percent below their April 3 all-time high of 35.02 euros ($44.89) before the first report of Vneshtorgbank's share purchase appeared.

"While the timing may reflect a buying opportunity, analysts say, such a move by the Russian state-owned bank would almost certainly not be intended as a purely financial operation.

"Vneshtorgbank serves as the international financing arm for a number of Russian industries and "appears to reflect the political agenda of a fairly constricted constituency within governing circles," said Richard Hainsworth, head of the Moscow-based bank rating agency Rusrating."


http://www.cbsnews.com/stories/2006/...30/ap/business/mainD8JQTJ181.shtml



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9977 posts, RR: 96
Reply 10, posted (7 years 10 months 4 weeks 5 hours ago) and read 2651 times:
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Quoting NAV20 (Reply 9):
Looks as if the 'rumour' is being confirmed from all sides now

Except BAE SYSTEMS themselves, of course, who have quite specifically said that their board has still yet to make a recommendation. I take their statement NOT to be a "rumour".

Quoting Leelaw (Reply 8):
A spokeswoman for BAE Systems Monday told Dow Jones Newswires that the board still intends to make its recommendation on whether to sell the stake based on the results of the audit, but she declined to say when that decision could come

Regards


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 11, posted (7 years 10 months 4 weeks 3 hours ago) and read 2603 times:

Agree it's a 'rumour' only, A'man - and a rumour about a 'recommendation,' at that.  Smile

But, assuming that the audit confirms that Airbus is looking at much lower profits for several years, it's difficult to see what other recommendation Turner could make. Not only could the money presumably get BAE a better return in their core business, if BAE stay in the Airbus loop the very first thing they'll have to do is stump up their share of the A350 development cost.

Not good news from Airbus' viewpoint, either. It's around E3B. they WON'T have available this financial year to pay for getting the A380 sorted out and making a start on the A350 design. Or to pay out in dividends, for that matter.

I suspect that, within a month or two, we'll be hearing the words 'A350 government launch aid' bandied about a fair bit. Maybe Putin will offer to put in a few bob to help?  Smile



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 12, posted (7 years 10 months 3 weeks 5 days 1 hour ago) and read 2517 times:

BAE to sell Airbus stake to EADS for 2.75 bln euros
We can keep speculating on motives, but it looks like it's going to happen.

Quote:
LONDON, Sept 6 (Reuters) - British defence firm BAE Systems (BA.L: Quote, Profile, Research) said on Wednesday that its board had decided to proceed with selling its stake in planemaker Airbus to EADS (EAD.PA: Quote, Profile, Research) for 2.75 billion euros ($3.53 billion).
"The Board believes that Airbus is facing a challenging short to medium-term outlook," BAE said in a statement to the London Stock Exchange, explaining its decision to back the sale.



"When all is said and done, more will be said than done".
User currently offlineDAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 3
Reply 13, posted (7 years 10 months 3 weeks 5 days 1 hour ago) and read 2507 times:

This implies that the A-380 fiasco has left a bad taste in the investors mouths. I cant say I blame them much.


One Nation Under God
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9977 posts, RR: 96
Reply 14, posted (7 years 10 months 3 weeks 4 days 23 hours ago) and read 2465 times:
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Quoting NAV20 (Reply 11):
Agree it's a 'rumour' only, A'man - and a rumour about a 'recommendation,' at that.

Ok already - now it's a fact. Stop rubbing it in  Smile........


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 15, posted (7 years 10 months 3 weeks 4 days 17 hours ago) and read 2390 times:

Quoting DAYflyer (Reply 13):
the A-380 fiasco has left a bad taste in the investors mouths

It'll be interesting to see which way the sharemarket cat jumps over this news, in the short term anyway. Towards BAE because it can now concentrate on its core business, or towards EADS/Airbus because the uncertainty as to a future liability is now removed?



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
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