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BAE And Airbus Parent In Talks To Combine?  
User currently offlinemffoda From United States of America, joined Apr 2010, 1019 posts, RR: 0
Posted (1 year 7 months 1 week 1 day 21 hours ago) and read 5943 times:

Has anyone seen this article or have any other news regarding this potential hook-up?

http://blog.al.com/press-register-bu...eport_bae_and_airbus_parent_i.html

Quote: "Report: BAE and Airbus parent in talks to combine"

European Aeronautic, Defence & Space Co., the parent of Airbus SAS, is in negotiations with BAE Systems Plc about a combination of the two companies, Bloomberg reported, citing people familiar with the talks.

The talks are at an advanced stage, with the two companies exploring a combination that would allow London-based BAE to maintain its independence to sell into the U.S. defense market, according to Bloomberg.

A final deal hasn't been reached and an agreement may still fall through, according to the report.


edit:

And here is the Bloomberg link with more details...

http://www.bloomberg.com/news/2012-0...mbination-in-aerospace-revamp.html

[Edited 2012-09-12 09:06:16]


harder than woodpecker lips...
35 replies: All unread, showing first 25:
 
User currently offlineAirbusA6 From United Kingdom, joined Apr 2005, 2004 posts, RR: 0
Reply 1, posted (1 year 7 months 1 week 1 day 21 hours ago) and read 5914 times:

http://www.bbc.co.uk/news/business-19576907

It's on the BBC website as well.

A fascinating development, the various European aerospace companies have had loads of joint ventures and mergers/splits over the years...

A bit of a U turn by BAE who sold their stake in Airbus to concentrate on US defence sales, maybe they're regretting it...



it's the bus to stansted (now renamed national express a4 to ruin my username)
User currently offlinegoosebayguy From United Kingdom, joined Sep 2009, 372 posts, RR: 0
Reply 2, posted (1 year 7 months 1 week 1 day 21 hours ago) and read 5907 times:

Would be a dreadful move by BAE. They suffer from poor management but this would be terrible. Hope its not true.

User currently offlineholzmann From United States of America, joined Jan 2011, 178 posts, RR: 0
Reply 3, posted (1 year 7 months 1 week 1 day 21 hours ago) and read 5881 times:

DER SPIEGEL is salivating at the prospect of the two forming a (mainly German) company that could trump BOEING:

http://www.spiegel.de/wirtschaft/unt...handeln-ueber-fusion-a-855476.html


User currently offlinemffoda From United States of America, joined Apr 2010, 1019 posts, RR: 0
Reply 4, posted (1 year 7 months 1 week 1 day 21 hours ago) and read 5848 times:

Quoting AirbusA6 (Reply 1):
A bit of a U turn by BAE who sold their stake in Airbus to concentrate on US defence sales, maybe they're regretting it...

They sold their 20% stake in Airbus several years ago, and now they would be a 40% stake of EADS/Airbus. I'm not sure if that is a good or bad deal for BAE? Although BAE stock jumped up 12% on the news...   



harder than woodpecker lips...
User currently offlineimiakhtar From , joined Dec 1969, posts, RR:
Reply 5, posted (1 year 7 months 1 week 1 day 21 hours ago) and read 5829 times:

Quoting goosebayguy (Reply 2):
Would be a dreadful move by BAE. They suffer from poor management but this would be terrible. Hope its not true.

On the contrary, I think this merger would be excellent for the UK.

In my opinion, BAE made a HUGE error when they relinquished their 20% stake and put all their eggs into the defence market. Tumbling defence budgets and an ever decreasing order backlog means they have to diversify their portfolio.

It would also be good news for Airbus workers in the UK as it would in all likelihood grant them a little peace of mind as regards to job security in the long term (I'm aware of the UK Govt and EADS wing work agreement post share sell).

For those who like to reminisce, there is an excellent report available on the UK parliamentary record website (hansard) from 2007 that goes into a lot of detail about the BAE share sell. Search under:

House of Commons
Trade and Industry Committee
Recent developments
with Airbus
Ninth Report of Session 2006–07
Volume I

[Edited 2012-09-12 09:29:05]

User currently offlineEPA001 From Netherlands, joined Sep 2006, 4593 posts, RR: 38
Reply 6, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5584 times:
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The Wall Street Journal is reporting this story as well but I cannot insert the link into this post without damaging the post.  

So possible interesting developments could be going on in the European Aviation Industry.  


User currently offlinemham001 From United States of America, joined Feb 2005, 3389 posts, RR: 2
Reply 7, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5548 times:

How would this not trigger European anti-trust rules?

User currently offlineStitch From United States of America, joined Jul 2005, 29686 posts, RR: 84
Reply 8, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5514 times:
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Quoting EPA001 (Reply 7):
The Wall Street Journal is reporting this story as well but I cannot insert the link into this post without damaging the post.

The WSJ is behind a paywall, so you cannot directly link. Use Google News, which will bypass it and display the article.


User currently offlineBongodog1964 From United Kingdom, joined Oct 2006, 3475 posts, RR: 3
Reply 9, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5493 times:

As others have said, BAe made the baffling, if not unfathomable decision to sell off its stake in Airbus, pinning its hopes on the defence market. This was at a time when military programmes were already being squeezed with military budgets les than half what they once were in terms of GDP.

There was a fear at the time that the sale of their Airbus stake might see Airbus withdrawing work from the UK, fortunately this has not been the case and EADS have proved to be a good employer. The same cannot be said for BAe whose declining military workload has seen widespread redundancies and closure of some sites. Others are only a shadow of their former selves.

Hopefully this merger will work to the advantage of both parties. Airbus should be able to utilise some of the surplus capacity that BAe have a s a result of military contraction, and BAe can provide technology which EADS might not have.

Just hope that the senior management at BAe are given a P45 rather than the keys to a larger executive office.


User currently offlineastuteman From United Kingdom, joined Jan 2005, 9836 posts, RR: 96
Reply 10, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5478 times:
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Quoting imiakhtar (Reply 5):
In my opinion, BAE made a HUGE error when they relinquished their 20% stake and put all their eggs into the defence market. Tumbling defence budgets and an ever decreasing order backlog means they have to diversify their portfolio.

????

I'd suggest that BAE's strategy in the period from considering selling the Airbus stake has worked very well.

They have broken their utter dependency on UK MOD (which was THE strategy).
They've become the 3rd largest defence (or is it defense) contractor in the USA, and made far more money in the US defence market in the period than their stake in Airbus would have in the same period.

BAE operating margin has been pretty much double-digit for a whie now.
It for sure wasn't at the time they sold the Airbus stake.....

Quoting mham001 (Reply 8):
How would this not trigger European anti-trust rules?

I'm guessing some special rules apply when it comes to defence and national interest..

rgds


User currently offlineEPA001 From Netherlands, joined Sep 2006, 4593 posts, RR: 38
Reply 11, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5447 times:
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Quoting Stitch (Reply 9):
Use Google News, which will bypass it and display the article.

Thanks for the tip!  


User currently onlineBMI727 From United States of America, joined Feb 2009, 15474 posts, RR: 26
Reply 12, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5359 times:

Quoting astuteman (Reply 10):
I'd suggest that BAE's strategy in the period from considering selling the Airbus stake has worked very well.

I agree. I'm not sure where this idea that not having a hand in civilian markets is awful. It hasn't hurt Lockheed, Northrop Grumman, or General Dynamics (if you don't count Gulfstream) and it hasn't hurt BAE.

Counting on European defense markets is a bad idea, but defense as a whole is still a pretty good business.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 13, posted (1 year 7 months 1 week 1 day 19 hours ago) and read 5329 times:

Quoting Stitch (Reply 9):
The WSJ is behind a paywall, so you cannot directly link. Use Google News, which will bypass it and display the article.

The Moderators recommend using one of the various link shortening services whenever a link to a source is not posting properly (The Wall Street Journal is among a handful of newspaper sites whose links do not render correctly. Even WSJ stuff posted on Yahoo is prone to this.).

EADS has to work on increasing their US military contract numbers anyway they can, and this is a no-brainer of an acquisition for them. Now whether this deal goes through, who knows.


User currently offlineastuteman From United Kingdom, joined Jan 2005, 9836 posts, RR: 96
Reply 14, posted (1 year 7 months 1 week 1 day 18 hours ago) and read 5295 times:
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Quoting Bongodog1964 (Reply 9):
As others have said, BAe made the baffling, if not unfathomable decision to sell off its stake in Airbus

It was neither baffling, unfathomable, or ill-judged.......

BAE made it very clear what the drivers were, and have done exactly what they said they would do.

Making the USA a defence "home market" was one of the best decisions the business has ever made.....
IMO  

Rgds


User currently offlineimiakhtar From , joined Dec 1969, posts, RR:
Reply 15, posted (1 year 7 months 1 week 1 day 18 hours ago) and read 5232 times:

Quoting astuteman (Reply 10):
????

I'd suggest that BAE's strategy in the period from considering selling the Airbus stake has worked very well.

They have broken their utter dependency on UK MOD (which was THE strategy).

You're right. Now they're relying on the Saudis. I believe BAE are still waiting for the Saudis to sign the Salam Eurofighter programme.

Quoting astuteman (Reply 10):
They've become the 3rd largest defence (or is it defense) contractor in the USA, and made far more money in the US defence market in the period than their stake in Airbus would have in the same period.

How long will that last? The picture painted in the annual reports is bleak.

Quoting astuteman (Reply 10):
BAE operating margin has been pretty much double-digit for a whie now.

That's one of the few positives.

I maintain my view that BAE selling their stake was short sighted, but I guess hindsight is 20/20.


User currently offlineBongodog1964 From United Kingdom, joined Oct 2006, 3475 posts, RR: 3
Reply 16, posted (1 year 7 months 1 week 1 day 16 hours ago) and read 4946 times:

Quoting astuteman (Reply 14):
Quoting Bongodog1964 (Reply 9):As others have said, BAe made the baffling, if not unfathomable decision to sell off its stake in Airbus
It was neither baffling, unfathomable, or ill-judged.......

BAE made it very clear what the drivers were, and have done exactly what they said they would do.

Making the USA a defence "home market" was one of the best decisions the business has ever made.....
IMO

Rgds

I know you have a vested interest as a BAe employee on the defence side of the business, but to my mind the decision to concentrate on defence was a classic case of short termism. each succesive generation of military equipment is procured in smaller numbers than its predecessor. How many Astutes are replacing the S & T class subs ? Remember the RAF ordering nearly 400 Tornados to be part of a fast jet fleet which also consisted of Harriers, Jaguars & Buccaneers. We now have a fast jet fleet a fraction of that size. The US military is also contracting fast.

If the move towards the US defence industry was such a good strategy, why now look to merge with the worlds largest Civil airliner business ?


User currently offlineAirbusA6 From United Kingdom, joined Apr 2005, 2004 posts, RR: 0
Reply 17, posted (1 year 7 months 1 week 1 day 15 hours ago) and read 4853 times:

Clearly, and this isn't just hindsight, defense budgets are under threat, and have been for several years, whereas civilian sales have been expanding fast, so voluntarily exiting Airbus was a major strategy call. Against this, their 20% stake gave them little power in running the business.

40% of the combined business sounds reasonable, and maintains a reasonable split between the European partners, I wonder if EADS will try to take over Dassault?



it's the bus to stansted (now renamed national express a4 to ruin my username)
User currently offlinesabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 47
Reply 18, posted (1 year 7 months 1 week 1 day 15 hours ago) and read 4812 times:

Great news!

A merger involving a share swap with EADS getting the controlling majority in the combined entity seems most likely.

I am sure NAV20 will just love this turn of events: BAE systems effectively absorbed into EADS! 

[Edited 2012-09-12 15:18:45]

User currently offlinescouseflyer From United Kingdom, joined Apr 2006, 3364 posts, RR: 9
Reply 19, posted (1 year 7 months 1 week 1 day 4 hours ago) and read 4575 times:

I'm wondering if the combined entity will be called BEADS? 

I think that this is just the next logical step that lead to the merger of all of the UK aircraft manufacturers into BAe.


User currently offlineSQ22 From Germany, joined Feb 2012, 97 posts, RR: 0
Reply 20, posted (1 year 7 months 1 week 1 day 4 hours ago) and read 4545 times:

Quoting AirbusA6 (Reply 17):
40% of the combined business sounds reasonable, and maintains a reasonable split between the European partners, I wonder if EADS will try to take over Dassault?

I think from an economic perspective that would make a lot of sense, but I doubt it from the French perspective, even if Dassault would be willing to sell there would be issues. Like with the unions and the government.

What about Saab Defence and Security? I think they have an agreement with BAE. Is it a distribution agreement?


User currently offliner2rho From Germany, joined Feb 2007, 2497 posts, RR: 1
Reply 21, posted (1 year 7 months 1 week 23 hours ago) and read 4247 times:

From a corporate point of view, BAE's US Defense business is definitely attractive for EADS, who sees it as a priority to grow in that market. For BAE, having a civilian side via Airbus & Eurocopter to compensate for cycles in defense spending is also good.

Whether its a good idea to create such a large company is another thing, IMO EADS is already very large and struggles to manage itself efficiently, making it larger and more complex will not help.

From the point of view of European Defense Ministries and taxpayers, this would be bad news as it creates a de-facto monopoly in many Defense sectors, and certainly in large defense projects. Alenia, Dassault, Saab, Thales & Co would be dwarfed and rendered insignificant. Competition would be provided by Boeing, LM or NG, but no intra-EU competition would exist.

As a taxpayer, I will not be happy if this merger goes forward.


User currently offlineautothrust From Switzerland, joined Jun 2006, 1545 posts, RR: 9
Reply 22, posted (1 year 7 months 1 week 23 hours ago) and read 4092 times:

Quoting Bongodog1964 (Reply 16):
The US military is also contracting fast.

Indeed, and this will be accelerated when the debts rise more as they do now.

How many projects has the Obama Administration canceled or downsized already ? Same for European Defence and British.

Only country's like Iran, Venezuela, India have massively increased their defence spendings in the last years. But mostly from Russia.



“Faliure is not an option.”
User currently offlinevv701 From United Kingdom, joined Aug 2005, 7257 posts, RR: 17
Reply 23, posted (1 year 7 months 1 week 22 hours ago) and read 3621 times:

Quoting sabenapilot (Reply 18):
A merger involving a share swap with EADS getting the controlling majority in the combined entity seems most likely.

My understanding is that a new holding company, 40 per cent owned by BAE Systems and 60 per cent owned by EADS, may be formed and that if this happens it will control the operational business units of both companies. I have seen no indication that the existing companies, business units or divisions of the two corporations would automatically be merged.

I do not know much about EADS. However BAE Systems comprises 12 separate Business Units. These range from "BAE Systems Australia" through "Maritime - Naval Ships" and "Maritime - Submarines" to "Land & Armaments" and "Military Air & Information". No doubt if an agreement is reached there may be some mergers at the Business Unit level. But equally it is possible that many of these Business Units will continue to operate as they do today with only a change in reporting lines.

Operationally - but not structurally - the combined business could turn out to look somewhat like IAG where BA and IB continue to operate separately even though IB handed over their BCN-LHR service to BA and BA are now sending aircraft to MAD to be painted, thus improving the efficiency of both airlines operations.

Structurally it seems possible (likely?) that shareholders may not be directly impacted. By that I mean that the quoted companies will remain owned as they are today, with BAE Systems holding 40 per cent of New Company shares and EADS holding 60 per cent.

In some ways this reflects the current EADS shareholding structure. Lagardere and the French government own 22 per cent of EADS between them, Daimler also owns 22 per cent (but has agreed to sell one third of this holding to the German government) and the Spanish government owns 5.5 per cent. However Daimler is, according to the BBC, considering taking this opportunity of selling in the market the other two-thirds of its current 22 per cent stake.


User currently offlineautothrust From Switzerland, joined Jun 2006, 1545 posts, RR: 9
Reply 24, posted (1 year 7 months 1 week 6 hours ago) and read 2864 times:

Quoting vv701 (Reply 23):

I do not know much about EADS. However BAE Systems comprises 12 separate Business Units.

In similar way EADS has also several separate Business Units:

EADS North America

EADS Airbus

EADS Eurocopter

EADS Cassidian (Defense)

EADS Cassidian Air Systems

EADS Cassidian Systems

EADS Cassidian Electronics

EADS Missiles

EADS Test & Services

EADS Cassidian CyberSecurity GmbH

EADS Astrium (Space)

EADS Astrium Satellites

EADS Astrium Space Transportation

EADS Astrium Services

EADS Socata

EADS Military

EADS Sogerma Services

EADS Elbe Flugzeugwerke

EADS ATR



“Faliure is not an option.”
25 sweair : I share these thoughts, and Pentagon will never accept having foreign governments involved in their subs, aircraft carriers and what else BAE does in
26 Post contains images astuteman : May I suggest a good re-read of this sentence to spot the in-built contradiction? ...... Rgds
27 sweair : So you think Pentagon would accept having foreign governments involved in their future super secret military toys? BAE does not have this problem in
28 autothrust : EADS & BAE are the only companies in Europe which can ensure the technological edge we have in many areas and are competitive enough to challange
29 astuteman : I was trying to work out how you saw BAE as "not foreign" in the context of Pentagon contracts....... The division BAE Systems (Inc) could be (and is
30 Bongodog1964 : As its an intellectual position, you need to bear in mind that BAe's reliance on defence, saw turnover drop by 14% and profits by 7% in the last fina
31 vv701 : The perception that the likes of BAE Systems and EADS can successfully compete in a market where technological developments even challenge the world's
32 Post contains images astuteman : Seems like a sensible time to make a move then, doesn't it? In all seriousness, I think this has been recognisable for quite some time. However, big
33 babybus : If it brings more jobs to the UK aviation sector than I'm all for it. However, despite what has been said here I think them selling their Airbus stake
34 sweair : I think a merged BAE will actually lose jobs, Daimler and France will demand to be the guy who benefits the most like always. Next would be to gobble
35 Bongodog1964 : Fortunately Daimler and France have treated UK manufacturing failry since taking over BAe's Airbus stake, no work has been lost from the UK at all. W
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