The European Aeronautics Space & Defence Co., the parent company of Airbus, is in advanced talks about a possible merger with British defense group BAE Systems.
BAE and EADS confirmed the discussions in a statement on Sept. 11 after they were initially reported by Bloomberg News. They said the merged group would be owned 60 percent by EADS and 40 percent by BAE. The two companies would remain separately listed, however, and some BAE holdings would be “ringfenced” to protect existing defense contracts.
Such a deal looks like a win for both companies. It would help EADS to limit its exposure to the highly cyclical civilian aircraft business, which accounts for the lion’s share of its sales and profits. BAE, for its part, faces declining defense spending in Britain and the U.S., its key markets. “It looks like a very interesting proposition for both [companies'] sets of shareholders,” says Zafar Khan, an aerospace analyst with Société Générale in London. BAE shares jumped more than 7.7 percent on the news, while EADS shares fluctuated but were mostly down.
I am sure the ownership structure will be the biggest sticking point/most difficult part of the process. Hopefully it could be cleared up and the nationalistic issues and requirements eliminated but I tend to doubt that. We'll have to wait and see.
[Edited 2012-09-12 10:48:29]