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BAE And Eads Cancel Merger Plans  
User currently offlineKaiTak747 From Switzerland, joined Aug 2012, 157 posts, RR: 0
Posted (1 year 11 months 2 weeks 3 days 16 hours ago) and read 4265 times:

Due to political opposition.

BBC news article:

http://www.bbc.co.uk/news/business-19897699

49 replies: All unread, showing first 25:
 
User currently offlinebongodog1964 From United Kingdom, joined Oct 2006, 3593 posts, RR: 3
Reply 1, posted (1 year 11 months 2 weeks 3 days 15 hours ago) and read 4205 times:

It appeared that Tom Enders saw the merger as a way to limit political influence from France and Germany, thus strengthening his powerbase at EADS, unfortunately the German Govt appears to be unwilling to sacrifice its hold over the company.

User currently offlinephxa340 From United States of America, joined Mar 2012, 891 posts, RR: 1
Reply 2, posted (1 year 11 months 2 weeks 3 days 14 hours ago) and read 4132 times:

This is unfortunate as a combined entitity would have been a powerful company with expansive Defensive and Commercial capabilities. Dang politics.

User currently offlinestarrion From United States of America, joined Jul 2003, 1126 posts, RR: 2
Reply 3, posted (1 year 11 months 2 weeks 3 days 14 hours ago) and read 4038 times:

Better crediting politics for scuttling a merger than other reasons.

I know of one merger where the dominant company stated that they elected not to proceed with a merger because they felt the companies would not have the expected "synergistic effects" after performing their due diligence.

The auditing accountants running screaming from the building into traffic being a little difficult to ignore.



Knowledge Replaces Fear
User currently offlineStitch From United States of America, joined Jul 2005, 31011 posts, RR: 86
Reply 4, posted (1 year 11 months 2 weeks 3 days 13 hours ago) and read 3999 times:
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Quoting bongodog1964 (Reply 1):
...unfortunately the German Govt appears to be unwilling to sacrifice its hold over the company.

And they can now increase their hold by taking over Daimler's share, making the German Government a direct stakeholder in EADS like the French Government currently is.


User currently offlinezeke From Hong Kong, joined Dec 2006, 9109 posts, RR: 75
Reply 5, posted (1 year 11 months 2 weeks 3 days 13 hours ago) and read 3964 times:

Quoting KaiTak747 (Thread starter):

I would not rule this out in the future, it worked in the past.



We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlinePHX787 From Japan, joined Mar 2012, 7595 posts, RR: 18
Reply 6, posted (1 year 11 months 2 weeks 3 days 13 hours ago) and read 3877 times:

Quoting KaiTak747 (Thread starter):
Due to political opposition.
Quoting bongodog1964 (Reply 1):
It appeared that Tom Enders saw the merger as a way to limit political influence from France and Germany, thus strengthening his powerbase at EADS, unfortunately the German Govt appears to be unwilling to sacrifice its hold over the company.

So wait a sec....Who is opposing who? I don't quite understand the political background behind this. (unable to read link)

Quite surprising here if you ask me. I wonder what BAE will have to do now.



次は、渋谷、渋谷。出口は、右側です。電車とホームの間は広く開いておりますので、足元に注意下さい。
User currently offlinecobramaneuver From United Kingdom, joined Jan 2011, 13 posts, RR: 0
Reply 7, posted (1 year 11 months 2 weeks 3 days 13 hours ago) and read 3873 times:

''-The deal would have created a European aerospace and defence giant comparable in size to Boeing of the US.

-It would also have helped BAE, which was suffering from defence spending cuts by the US and UK, its two main customers.

- It would have brought BAE's strong presence in the US together with Airbus' booming business in the growth market of Asia-Pacific.''


well such a shame.


User currently offlineStitch From United States of America, joined Jul 2005, 31011 posts, RR: 86
Reply 8, posted (1 year 11 months 2 weeks 3 days 13 hours ago) and read 3827 times:
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Quoting PHX787 (Reply 6):
Who is opposing who? I don't quite understand the political background behind this.

According to the BBC Report, the Board of Directors for BAE wanted the following restrictions in place with the merged company:

1) The governments of the UK, Germany and France could each hold no more than 9% of the outstanding shares of the merged company

2) If those governments did own shares in the merged company, they could not combine them into a voting block

3) The governments should not have their representatives sitting on the Board of Directors of the merged company.

The German Government refused to relinquish the right to put their representatives on the Board of Directors. And their ability to do so could put at risk current and future US Department of Defense contracts. As BAE is a major US defense contractor, that risk pretty much killed the deal.


User currently offlinecv990coronado From South Africa, joined Nov 2007, 342 posts, RR: 0
Reply 9, posted (1 year 11 months 2 weeks 3 days 11 hours ago) and read 3641 times:
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Round One over.

I think there will be quiet discussions behind the scenes and it will reemerge later next year. The proposal was leaked too soon for the proper ground work to have been done. The realities facing the industry, plus the problems and opportunities for the two companies will bring them back together again. Hopefully then the politicians will see the long term wisdom of the deal and not just the short term national issues.



SSC-707B727 737-741234SP757/762/3/772/WA300/10/319/2/1-342/3/6-880-DAM-VC10 TRD 111 Ju52-DC8/9/10/11-YS11-748-VCV DH4B L
User currently offlineRevelation From United States of America, joined Feb 2005, 12565 posts, RR: 25
Reply 10, posted (1 year 11 months 2 weeks 3 days 11 hours ago) and read 3588 times:

Quoting cv990coronado (Reply 9):
The realities facing the industry, plus the problems and opportunities for the two companies will bring them back together again.

From what I read, there really wasn't a lot of synergy per se, it was more about the "bigger is better" theory.

It's also not hard to see the EADS side of the world to want to break the liplock on the government teat, now that the taxpayers have been milked pretty hard.



Inspiration, move me brightly!
User currently offlinesweair From Sweden, joined Nov 2011, 1824 posts, RR: 0
Reply 11, posted (1 year 11 months 2 weeks 3 days 10 hours ago) and read 3535 times:

I cant see Pentagon being thrilled by having the French or German governments inside its business. I think anything that even smalls foreign government is a big no no in Pentagon.

User currently offlineAesma From France, joined Nov 2009, 6672 posts, RR: 11
Reply 12, posted (1 year 11 months 2 weeks 3 days 10 hours ago) and read 3448 times:

Well I'm glad too, since I'd rather not have more "synergies" with the UK until they decide if they're with us Europeans, or want to be the 51st US state.


New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlinesweair From Sweden, joined Nov 2011, 1824 posts, RR: 0
Reply 13, posted (1 year 11 months 2 weeks 3 days 9 hours ago) and read 3402 times:

UK is wise not to trust the french   It gives them access to Pentagons fat pork among other things.

User currently onlineastuteman From United Kingdom, joined Jan 2005, 10046 posts, RR: 96
Reply 14, posted (1 year 11 months 2 weeks 3 days 9 hours ago) and read 3376 times:
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Quoting Aesma (Reply 12):
Well I'm glad too, since I'd rather not have more "synergies" with the UK until they decide if they're with us Europeans, or want to be the 51st US state.

???

You make trying to be a fair and balanced member of the international community sound like a crime.........   

I'm not sure that being forced to choose "either - or" is the healthiest way forward in the modern world

I just pray that the wings don't fall off your favourite airliner manufacturer.......  
Quoting PHX787 (Reply 6):
I wonder what BAE will have to do now

"Have" to do?

I wonder what they will do

Rgds


User currently offlineRevelation From United States of America, joined Feb 2005, 12565 posts, RR: 25
Reply 15, posted (1 year 11 months 2 weeks 3 days 5 hours ago) and read 3249 times:

Quoting Stitch (Reply 8):
The German Government refused to relinquish the right to put their representatives on the Board of Directors.

I have to wonder to what degree the A400M saga made the Germans take this position. They saw the cost of A400M's cost spiraling up while their economy was spiriling down, and while the process of getting to a workable (or at least plausable) agreement was tortured, they had the leverage that got them a seat at the table and got their voice listened to. If there were a mere holder of 9% and of no directorship, they wouldn't have that position.

Quoting Aesma (Reply 12):
Well I'm glad too, since I'd rather not have more "synergies" with the UK until they decide if they're with us Europeans, or want to be the 51st US state.

Quite uninformed comment, IMHO, since a key driver of the deal was EADS's desire to sink their teeth into that American Pie in the same way BAe has suceeded at doing.

I'm not at all fond of it, but the US spends more on defense then the rest of the world combined, so it's a big American Pie that's certainly worth whatever bite you can get.

It was also a clever attempt on the part of capitalists at EADS to significantly reduce the influence if not outright control that EU not-so-capitalist governments have over EADS.

Stitch named the key points related to this:

Quoting Stitch (Reply 8):
1) The governments of the UK, Germany and France could each hold no more than 9% of the outstanding shares of the merged company

2) If those governments did own shares in the merged company, they could not combine them into a voting block

3) The governments should not have their representatives sitting on the Board of Directors of the merged company.

Clearly this would make life easier and more profitable for EADS management, but it seems that Trooper Tom's jump into battle didn't turn out so well for him. Seems his own side didn't tell him about the mean crosswind they were dumping him into, and he ended up miles off target with no support anywhere near by.

Sigh, it's times like this that I might actually want to read the comments of a certain former member from the Netherlands, then again, maybe not...

Quoting astuteman (Reply 14):
I wonder what they will do

I can imagine you have better guesses than most of the rest of us do!  

I had read a few tweets saying that upon close inspection some on the BAe side felt that the 60/40 split wasn't equitable from the BAe point of view.

I've just surfed the web a bit and commentators seem to suggest one negative of this is that the investing community now wants the quick rewards that they feel can come from a merger, presuming one can find the right partner.

Clearly EADS is off the table, and some commentators are saying that the DoD will not look favorably on a merger between BAe and the two biggest US defense contractors, LM and NG.

It make take some doing for BAe to satiate the investors.

[Edited 2012-10-10 18:18:13]


Inspiration, move me brightly!
User currently offliner2rho From Germany, joined Feb 2007, 2634 posts, RR: 1
Reply 16, posted (1 year 11 months 2 weeks 2 days 18 hours ago) and read 3009 times:

The businesses of EADS and BAE are complementary, with little overlap. EADS is strong in aerospace but weak in defense systems, which are BAE's specialty. The only "synergy" would have been Cassidian likely swallowed by BAE.

The combined "BEADS"   would have been much more balanced between commercial and defense activities. EADS would have gotten access to Pentagon contracts, and the opportunity to completely redo the balance of power within the company, and in the words of Enders, finally be run as a "normal company".

So from a purely business point of view, there was a lot of sense in the merger.

Having said that, as a taxpayer I'm happy it hasn't gone through (yet...), as it would have created an effective defense monopoly in Europe, dwarfing Thales, Alenia, Safran, etc, who could at most aspire to become 1st or 2nd tier contractors.


User currently offlineAsturias From Spain, joined Apr 2006, 2156 posts, RR: 16
Reply 17, posted (1 year 11 months 2 weeks 2 days 18 hours ago) and read 2988 times:

Quoting Stitch (Reply 8):
According to the BBC Report, the Board of Directors for BAE wanted the following restrictions in place with the merged company:

Yeah, that's not going to happen.

Quoting Revelation (Reply 15):
Clearly this would make life easier and more profitable for EADS management, but it seems that Trooper Tom's jump into battle didn't turn out so well for him. Seems his own side didn't tell him about the mean crosswind they were dumping him into, and he ended up miles off target with no support anywhere near by.

No, BAE made the demand - not EADS.

Read. Comprehend. Post.



Tonight we fly
User currently offlineRevelation From United States of America, joined Feb 2005, 12565 posts, RR: 25
Reply 18, posted (1 year 11 months 2 weeks 2 days 16 hours ago) and read 2929 times:

Quoting r2rho (Reply 16):
EADS would have gotten access to Pentagon contracts, and the opportunity to completely redo the balance of power within the company, and in the words of Enders, finally be run as a "normal company".

Right, but clearly he overreached. I suppose one could say he miscalculated, and others could say the only way he could have found out everyone's true position is to have moved forward the way he did.

Quoting Asturias (Reply 17):
No, BAE made the demand - not EADS.

It's not clear what demand you are referring to.

When I refer to Tom's side, I'm referring to the Germans, not EADS.

You see, Tom's a former German Army Paratrooper.

Quoting Asturias (Reply 17):
Read. Comprehend. Post.

Aren't we high and mighty this morning?

I'd be happier if you kept such snide comments to yourself.



Inspiration, move me brightly!
User currently onlineastuteman From United Kingdom, joined Jan 2005, 10046 posts, RR: 96
Reply 19, posted (1 year 11 months 2 weeks 2 days 15 hours ago) and read 2872 times:
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Quoting Asturias (Reply 17):
No, BAE made the demand - not EADS

???
Two sides "demanded" two different things, as is nearly always the case in negotiations...
It turns out the demands were mutually exclusive

Quoting Stitch (Reply 8):
The German Government refused to relinquish the right to put their representatives on the Board of Directors

i.e. they "demanded" to be able to put a representative on the BOD.

Quoting Asturias (Reply 17):
Read. Comprehend. Post

Good advice, that.

Rgds


User currently offlineAsturias From Spain, joined Apr 2006, 2156 posts, RR: 16
Reply 20, posted (1 year 11 months 2 weeks 2 days 13 hours ago) and read 2819 times:

Quoting astuteman (Reply 19):
Two sides "demanded" two different things, as is nearly always the case in negotiations...

I'm sure, but I was only referring to the demand made by BAE on govt. control, in reply to the boggled up post by Revelation.

Quoting astuteman (Reply 19):
Good advice, that.

Very. Perhaps you should take it to heart as well.



Tonight we fly
User currently offlineAesma From France, joined Nov 2009, 6672 posts, RR: 11
Reply 21, posted (1 year 11 months 2 weeks 2 days 13 hours ago) and read 2777 times:

Quoting astuteman (Reply 14):
You make trying to be a fair and balanced member of the international community sound like a crime.

Fair and balanced puppet, you mean ?

Quoting Revelation (Reply 15):
Quite uninformed comment, IMHO, since a key driver of the deal was EADS's desire to sink their teeth into that American Pie in the same way BAe has suceeded at doing.

But at what cost ? I don't want to be dragged into US wars because of commercial contracts.



New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlinesweair From Sweden, joined Nov 2011, 1824 posts, RR: 0
Reply 22, posted (1 year 11 months 2 weeks 2 days 12 hours ago) and read 2758 times:

Quoting Aesma (Reply 21):
Fair and balanced puppet, you mean ?

I see nothing of the sort from him, what made you say that? Absurd!


User currently offlineAesma From France, joined Nov 2009, 6672 posts, RR: 11
Reply 23, posted (1 year 11 months 2 weeks 2 days 12 hours ago) and read 2739 times:

I'm talking about the UK alignment with the US.


New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlinepar13del From Bahamas, joined Dec 2005, 7233 posts, RR: 8
Reply 24, posted (1 year 11 months 2 weeks 2 days 12 hours ago) and read 2724 times:

Quoting KaiTak747 (Thread starter):
Due to political opposition.

All the articles I have read state that politicians were for the deal, those opposed were private investors / shareholders who believed that the political machinery involved with EADS would cause the merged company to loose out on the US market.
Now if you mean EADS as a company did not want to transfer additional production facilities to Germany to gain their support that's more about "horse trading" versus opposition.

Quoting bongodog1964 (Reply 1):
It appeared that Tom Enders saw the merger as a way to limit political influence from France and Germany,

Well that proves that he does not frequent Airliners.net, after all, everyone on this site knows that EADS is a business with little to no political intereference, other than claims from one side of the pond related to Launch aid, but we digress 

However much we may rail against it, and debate what percentages the governments of France and Germany have and whether they control the direction of EADS / Airbus, obviously they have some control / authority and clearly that is more important than full private control and potentially greater profits (potentially), not sure Mr. Enders was sober if as quoted above, he saw this as a way to reduce political influence.


25 Revelation : The reality is that you assumed I was talking about BAe when I was not. I'd like to suggest that we all agree that human communication in general is
26 USAF336TFS : I think you summed up nicely why many in the United States felt that this merger would never pass Pentagon muster. I doubt the vast majority of Ameri
27 par13del : I go the opposite way, I feel the merger will eventually happen, and if the US economy slows down the military industrial complex spending, the merge
28 Post contains images sweair : If US defence cuts get worse and BAE has even less contracts, what would be the win for France+Germany(EADS) merging with BAE? So the french can decid
29 par13del : Well, on the international market the combined company would have a wider range of products to keep customers in the fold. BAE claims 40% of its reve
30 r2rho : I see that similarly; with this move, Enders forced to show their cards, and if the merger had gone through, reduced or removed the political influen
31 sweair : I can imagine the problems if EADS had owned BAE in 2003, with the rift over Iraq, maybe even weapon systems being vetoed by EADS for US to use? I thi
32 Bongodog1964 : if you read the current comments on the A380 thread, about the absurdity of flying green A380's to Hamburg for fitting out, you might think that some
33 par13del : One article I read says that she demanded additional Airbus production shifted to Germany which the French declined, so I'm not sure it is just the G
34 Asturias : No, I assumed you were talking about EADS, because you wrote EADS, but you should have been talking about BAE (BAe is no more) Looking at Stitch's qu
35 sweair : EU will never work as there is constant nationalism even in the much integrated EADS/Airbus, FR and GER carp over childish percentages of everything.
36 par13del : Those childish percentages relate directly to jobs and taxation which is used to keep governments afloat and pay for services that the population hav
37 Revelation : It's darn next to impossible to keep this kind of a huge deal quiet especially as soon as it moved from the commercial sphere to the political sphere
38 gingersnap : I haven't kept close tabs on the potential of this merger. The only thing I did come across however was an argument over the location of various entit
39 Post contains links Revelation : Two long articles have just come out about the failed transaction, links are below. It appears that "Major Tom" Enders always had the main goal of ge
40 Post contains images astuteman : The more you post and link, the more convoluted these "BAE Demands" seem to get........ Rgds
41 Stitch : It sounds like Enders and the BAE Board felt the same, so perhaps the Board of BAE imposed these conditions because they had the power to do so where
42 Revelation : Interestingly enough, the Reuters article points out: It seems Germany was being offered terms similar to those that the French had agreed to, but Ge
43 Stitch : The French Government's control over SOGEADE is stronger than the German Government's control over Daimler AG, as France controls 60% of SOGEADE's sh
44 Revelation : Good point. It's interesting how neither of the articles seemed to deal very much with the notion that the governments find it advantageous to have s
45 par13del : Why would they, governments created Airbus and ultimately EADS, so based on where the companies are now, how has political control been detrimental t
46 Post contains images r2rho : Rather paradox, given all the historic Franco-German rivalry, that it has been Germany who has scuttled the plans of a German CEO that was supported
47 Revelation : Yes, the tricky part is/was convincing the politicians that now is the right time to shift their role from partner in EADS to investor in EADS. I thi
48 Post contains links r2rho : This article in German cites some parts of a letter from Enders to employees: http://www.airliners.de/management/s...s-rueckendeckung-fuer-enders/2824
49 Post contains links r2rho : This article in German cites some parts of a letter from Enders to employees: http://www.airliners.de/management/s...s-rueckendeckung-fuer-enders/2824
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