KaiTak747
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BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 2:16 pm

Due to political opposition.

BBC news article:

http://www.bbc.co.uk/news/business-19897699
 
Bongodog1964
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 2:40 pm

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.
 
phxa340
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 3:26 pm

This is unfortunate as a combined entitity would have been a powerful company with expansive Defensive and Commercial capabilities. Dang politics.
 
starrion
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 4:09 pm

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.
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Stitch
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 4:21 pm

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.
 
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zeke
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 4:34 pm

Quoting KaiTak747 (Thread starter):

I would not rule this out in the future, it worked in the past.
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PHX787
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 4:58 pm

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.
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 5:02 pm

''-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.
 
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Stitch
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 5:11 pm

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.
 
cv990Coronado
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 6:50 pm

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.
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 7:12 pm

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.
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sweair
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 7:35 pm

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.
 
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Aesma
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 8:08 pm

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.
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sweair
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 8:28 pm

UK is wise not to trust the french   It gives them access to Pentagons fat pork among other things.
 
astuteman
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RE: BAE And Eads Cancel Merger Plans

Wed Oct 10, 2012 8:35 pm

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
 
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 1:11 am

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]
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r2rho
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 12:01 pm

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.
 
Asturias
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 12:15 pm

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.
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 1:56 pm

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! Light the song with sense and color.
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astuteman
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 3:05 pm

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
 
Asturias
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 4:50 pm

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.
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Aesma
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 5:20 pm

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.
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sweair
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 5:32 pm

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

I see nothing of the sort from him, what made you say that? Absurd!
 
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Aesma
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 5:42 pm

I'm talking about the UK alignment with the US.
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par13del
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 5:58 pm

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.
 
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Revelation
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 6:00 pm

Quoting Asturias (Reply 20):

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.

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 imperfect, and that written internet communication is even more so. However, if you want to go down the path of being an a-hole, I can roll that way too.
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Faced with mysteries dark and vast, statements just seem vain at last.
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USAF336TFS
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 7:05 pm

Quoting Aesma (Reply 21):
But at what cost ? I don't want to be dragged into US wars because of commercial contracts.

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 Americans would feel comfortable with an implied and/or indirect Franco-German veto power over U.S. weapons systems and their use.

When I first heard about the merger talks, I believed then that the likelihood of it happening was minimal, at best.
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par13del
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 7:29 pm

Quoting USAF336TFS (Reply 26):
When I first heard about the merger talks, I believed then that the likelihood of it happening was minimal, at best.

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 merger will be revisited sooner rather than later. In some quarters the loss or potential loss of the US market is huge, however, if the business falls, it would no longer be an issue.

The civilian market was previously merged to create Airbus, so the military side should be no different.
 
sweair
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 7:36 pm

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 decide what subs UK builds? Never trust people who lost all wars  
 
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par13del
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RE: BAE And Eads Cancel Merger Plans

Thu Oct 11, 2012 11:06 pm

Quoting sweair (Reply 28):
If US defence cuts get worse and BAE has even less contracts, what would be the win for France+Germany(EADS) merging with BAE?

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 revenue is generated in the US, I don't think very many expected that to remain after the merger.
I think the merger was about product range to international customers, thus it will eventually come off.
 
r2rho
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 8:27 am

Quoting Revelation (Reply 18):
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 par13del (Reply 24):
he saw this as a way to reduce political influence.

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 influence in EADS. His only "miscalculation" is that, IMO he did not count on it leaking so early and would have preferred (and needed) a longer negotiation period behind closed doors without all the open public debate. But the early leaking of the news kind of killed any chance.
 
sweair
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 8:53 am

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 think Pentagon would demand a separate entity if they were to do business with Pentagon, with 0% political influence. Or BAE would have lost all business in the end, a huge loss!

This merger will be very hard to get done, its not a straight business merger, its also 4 governments involved, 2 vs 2 it seems US/UK vs FR/GER. The mistrust from both sides are still alive, it feels like EU is more anti US than the other way now.
 
Bongodog1964
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 11:39 am

Quoting par13del (Reply 24):
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

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 do acknowledge that Airbus sometimes does things for political reasons.

The press are reporting that the stumbling block to a deal was Chancellor Merkel, who refused to contemplate any thought of the merger. Senior figures in her government had previously been consulted and gave a positive indication which led EADS to think that a deal was possible.
 
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par13del
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 1:42 pm

Quoting Bongodog1964 (Reply 32):

The press are reporting that the stumbling block to a deal was Chancellor Merkel, who refused to contemplate any thought of the merger.

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 Germans who created a stumbling block.
 
Asturias
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 2:02 pm

Quoting Revelation (Reply 25):
The reality is that you assumed I was talking about BAe when I was not.

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 quote, one you refer to:

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:

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.

Then your comment on that very qoute:

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.

Stitch quite evidently talks about the demands made by BAE and you interpret that somehow as the demand of EADS - is BAE then already a sockpuppet of EADS?

Any conspiracy theory about EADS is pretty much blown out of the water since:

A) this was the BAE demand, not the EADS demand, which means your talking about 'trooper tom' was supposed to be 'tricky dick' or 'ian the brit' or whatever.

B) if 'trooper tom' was plotting anything by his lonesome, he gets fired.

Quoting Revelation (Reply 25):
I'd like to suggest that we all agree that human communication in general is imperfect, and that written internet communication is even more so. However, if you want to go down the path of being an a-hole, I can roll that way too.

You're free to roll any way you want, but you're going to have to live with someone correcting an obvious error you made on the interwebs - it happens from time to time and especially when it comes to conspiracy theories, since those are the most allergic to facts.
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sweair
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 3:10 pm

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.

Under the nice we are united EU umbrella nationalism is still strong.
 
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par13del
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 3:43 pm

Quoting sweair (Reply 35):
FR and GER carp over childish percentages of everything.

Under the nice we are united EU umbrella nationalism is still strong.

Those childish percentages relate directly to jobs and taxation which is used to keep governments afloat and pay for services that the population have been groomed to expect.
In the EU today, is trade still the largest percentage of what is governed, if so, nationalism will continue to prevail until a federation is completed and national governments are gone.
 
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Revelation
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 7:41 pm

Quoting r2rho (Reply 30):
His only "miscalculation" is that, IMO he did not count on it leaking so early and would have preferred (and needed) a longer negotiation period behind closed doors without all the open public debate. But the early leaking of the news kind of killed any chance.

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.

Tom did get everyone to show their cards, but the cards show that DE and FR really like controlling EADS, which is not the kind of cards Tom wanted to see.

Quoting Asturias (Reply 34):
Stitch quite evidently talks about the demands made by BAE and you interpret that somehow as the demand of EADS

No, I changed the topic to that of EADS and Ender's failure to get the support of the German government, and because "human communication in general is imperfect, and that written internet communication is even more so" you didn't follow my lead, and are now accusing me of furthering some conspiracy that I know nothing about. If you want to follow that agenda, do so without me, please.
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Gingersnap
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RE: BAE And Eads Cancel Merger Plans

Fri Oct 12, 2012 10:02 pm

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 entities of a newly merged company. The UK government (rightly) wanted the defence arm head-quartered in the UK. I also noted the French & Germans were arguing over the location of another arm of the company.
Other than that, it appeared to me that at the current time due to such petty arguing, the merger didn't seem likely.
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RE: BAE And Eads Cancel Merger Plans

Sat Oct 13, 2012 3:38 pm

Quoting gingersnap (Reply 38):
I haven't kept close tabs on the potential of this merger.

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 getting rid of political interference, and he overreached:

Quote:

A particularly vocal public row a couple of years ago when Enders demanded more government backing up front for EADS' new military transport aircraft, the A400M, had won him few friends in politics, not least among his fellow Germans. And he kept on the offensive over the past year about those state holdings.

These clipped EADS' wings, he argued, when it needed to fly free to compete, notably with American arch-rival Boeing.

Addressing investors' doubts, he acknowledged during a presentation in London: "This will not go down in history as the deal with the most cost synergies."

Rather, as he wrote to employees of the group whose painful creation he witnessed at first hand in 2000, the merger would liberate EADS from constraints built into it at birth: "If we succeed and if the EADS shareholder pact can be dissolved, our governance will be significantly simplified and 'normalized'."

All of this seems to mirror my earlier cynical post:

Quoting Revelation (Reply 10):
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.

The article starts by saying that Enders was scheduled to accompany Merkel to China, but he had an accident while hang gliding and had to cancel. We'll never know if he lost a prime chance to get Angie on board with his agenda or not.

In any case, another interesting segment:

Quote:

A source close to the Spanish government, which also has a stake in EADS, told Reuters: "The fact that they tried to handle this deal behind the backs of the governments, who are the main shareholders, was a major error."

Enders' position may now be questioned and EADS's ownership structure may in any case face a major shake-up as Daimler and French conglomerate Lagardere try to sell out, disrupting a complex and partly secret set of internal pacts.

It's an interesting question, but as we see in the case of the A400M negotiations these things take years to iron out.

Ref: http://www.reuters.com/article/2012/...eads-bae-end-idUSBRE89A08O20121011

Also, a 2nd article:

http://www.businessweek.com/news/201...ment-after-bae-merger-judgment-day

gives us an insight as to how exactly the deal collapsed:

Quote:

“Most of my colleagues weren’t against it, it’s just that it wasn’t well prepared,” said Martin Lindner, economic spokesman for the Free Democratic Party, Merkel’s coalition partner. “I understand that Tom Enders and his crew are not keen on involving politicians in a merger, even when he’s the CEO of a very political company. Many of the products they make have governments as their clients.”

Optimism about winning more time and getting all governments on board evaporated on the morning of Oct. 9, a day before a deadline to file a merger document, one person said. That morning, Hollande took a phone call from Merkel, informing him that she opposed the deal, the person said. Hollande, who favored the combination, didn’t want to overrule the German chancellor, the person said.

“We were informed by the German chancellery that the chancellor had called the deal off,” said Rainer Ohler, a spokesman for EADS. “We offered dialog on a constant basis, conversations and negotiations, none of which was taken up.”

The first article tries to get to why Merkel was opposed:

Quote:

While others felt Berlin was offered good terms, including a stake in the firm and guarantees of jobs and office locations going to Germany, sources in the German government said a range of factors had soured Merkel on Enders' proposals. Those ranged from questions over the business logic and fears of damaging sales by possibly increasing state involvement to discomfort with involving Germany, still scarred by its militarist past, in what would become the world's biggest armaments manufacturer.

As once source close to Merkel said: "Defense is an especially sensitive subject in Germany."

The second also points out that all of this leaves Enders in an uncomfortable position:

Quote:

By publicly blaming the German government for the collapse of the negotiations, Enders risks further straining relations as he draws up an alternative plan to boost EADS’s defense business. The German military is the biggest customer of that unit and the two sides also need to agree on cuts to Tiger and NH90 helicopter purchases, built by EADS unit Eurocopter, with more than $5 billion on the line.

And it comes out that Enders has been drawing some flak from the German government not only from the whole A400M debacle but also from the A350 work share agreement:

Quote:

Discontent also flared on the civil aviation side. In the early development phase of Airbus’s A350 wide-body plane, France got 40 percent of the work-share compared with just 30 percent for Germany, breaking a quarter century tradition of allotting work in proportion to countries’ shareholders in the planemaker.

Enders argued that France boasted deeper engineering resources, and that it was Germany’s fault for not promoting aerospace more. Germany threatened to withhold development loans. The tone got shriller when Enders consolidated EADS headquarters in Toulouse, France, this year. The company had previously operated a dual-structure with Munich and Paris as co-equal centers of power. Hintze wrote Enders a letter complaining that the shift from Germany was unacceptable.

There is soooo much going on!

One important thing to realize, though, is that even though Enders is not getting what he wants, there is little chance that he's going anywhere:

Quote:

“If the reasoning is that this decision was wrong and short-sighted then Hintze may find himself under significant pressure,” he said. “There is no obvious alternative to Tom Enders, at least in the short term. Therefore, his position, although weakened, is arguably stronger than Hintze’s.”
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astuteman
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RE: BAE And Eads Cancel Merger Plans

Sat Oct 13, 2012 3:44 pm

Quoting Revelation (Reply 39):
There is soooo much going on!

The more you post and link, the more convoluted these "BAE Demands" seem to get........      

Rgds
 
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Stitch
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RE: BAE And Eads Cancel Merger Plans

Sat Oct 13, 2012 3:57 pm

Quoting astuteman (Reply 40):
the more convoluted these "BAE Demands" seem to get...

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 Enders appears to not have.
 
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Revelation
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RE: BAE And Eads Cancel Merger Plans

Sat Oct 13, 2012 4:33 pm

Quoting astuteman (Reply 40):
The more you post and link, the more convoluted these "BAE Demands" seem to get........

Interestingly enough, the Reuters article points out:

Quote:

French and British officials said their differences, once seen as the toughest to overcome, had been settled; London had accepted a continued French state shareholding and Paris agreed to limits it had sought to avoid. They both pointed to Berlin, where Merkel and her ministers kept stony silence, as the principal naysayer when time ran out for talks on Wednesday.

It seems Germany was being offered terms similar to those that the French had agreed to, but Germany just wasn't willing to contemplate the merger going through nor even continue discussions, which is strange since Germany's share in EADS is held indirectly through Diamler, and it'd seem that this agreement would have "normalized" the roles of the governmental stakeholders in the enterprise.
Inspiration, move me brightly! Light the song with sense and color.
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Stitch
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RE: BAE And Eads Cancel Merger Plans

Sat Oct 13, 2012 5:20 pm

Quoting Revelation (Reply 42):
...it'd seem that this agreement would have "normalized" the roles of the governmental stakeholders in the enterprise.

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 share and has veto power. So for Germany to have the same stakeholder role as France, they need to own Daimler AG's shares - which they are working to do via KfW.

France also controls more total EADS stock than Germany due to their ownership of the publicly traded stock and their control of the shares owned by Caisse des dépôts et consignations.

So for the German Government, taking ownership of the EADS shares currently held by Daimler AG would give them the level of control and power within EADS that the French Government currently has.

And that level of power is more than they would have had in a merged BAE/EADS under the guidelines desired by BAE's Board and Enders.
 
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RE: BAE And Eads Cancel Merger Plans

Sun Oct 14, 2012 2:51 pm

Quoting Stitch (Reply 43):
And that level of power is more than they would have had in a merged BAE/EADS under the guidelines desired by BAE's Board and Enders.

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 such control. As above, Merkel was said to be more worried about the commercial aspects of the deal and the image aspects of the deal, but one would imagine the political control is still a huge lever that the politicians are not willing to give up.
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par13del
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RE: BAE And Eads Cancel Merger Plans

Sun Oct 14, 2012 3:56 pm

Quoting Revelation (Reply 44):
but one would imagine the political control is still a huge lever that the politicians are not willing to give up.

Why would they, governments created Airbus and ultimately EADS, so based on where the companies are now, how has political control been detrimental to the company, it is profitable and the leading supplier of commercial a/c, yes it has had a couple projects which are regarded as not as "smooth" but so has fully private companies, so.....

Whatever my opinion is of political ownership / control of the company, unless one can point to the decline of the company and can place the blame on ownership, it will be difficult for politicians and their supporters to say they need to be hands off.
 
r2rho
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RE: BAE And Eads Cancel Merger Plans

Mon Oct 15, 2012 11:15 am

Quoting Revelation (Reply 37):
Tom did get everyone to show their cards, but the cards show that DE and FR really like controlling EADS, which is not the kind of cards Tom wanted to see.

  

Quoting Revelation (Reply 39):

Enders' position may now be questioned [...]
By publicly blaming the German government for the collapse of the negotiations, Enders risks further straining relations

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 by France   Enders' position may now be questioned by the German side of EADS, but they have no-one better for the job in the short term, and given his track record at Airbus, Enders will IMO make a good CEO for EADS. We'll see how this evolves...

Quoting Stitch (Reply 41):
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 Enders appears to not have.

   IMO those conditions were at least as much Enders' doing as BAE's - they were an integral part of Enders' plan to shake up the ownership structure and remove political influence. But Enders could not do it himself, so the conditions were presented officially as being imposed by BAE.

Quoting par13del (Reply 45):
Whatever my opinion is of political ownership / control of the company, unless one can point to the decline of the company and can place the blame on ownership, it will be difficult for politicians and their supporters to say they need to be hands off.

Indeed, politicians can perfectly and justifiably argue that EADS has done extremely well since its creation, even despite some built-in inefficiencies due to politics.
 
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RE: BAE And Eads Cancel Merger Plans

Mon Oct 15, 2012 12:26 pm

Quoting r2rho (Reply 46):
Quoting par13del (Reply 45):
Whatever my opinion is of political ownership / control of the company, unless one can point to the decline of the company and can place the blame on ownership, it will be difficult for politicians and their supporters to say they need to be hands off.

Indeed, politicians can perfectly and justifiably argue that EADS has done extremely well since its creation, even despite some built-in inefficiencies due to politics.

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 think that can be done eventually, because there is the logic that says it'll make it easier for EADS to get politically sensitive contracts, and because the holders of many of the FR and DE shares are trying to find a way to no longer be the holder of these shares.

I doubt that the FR, DE, ES and UK politicians liked the stress that came when EADS threatened to cancel the A400M. I think they'd all have preferred it to be a decision made based on commercial norms as opposed to political brinksmanship.

The story being told in the press is that the merger talks came up spontaneously and thus the ground was not well prepared.

Personally I can see EADS getting to the type of situation that Enders wants, it'll just take years of careful negotiation to get to that point, and will have to have strict guarantees around workshares, which is really what the politicians are interested in.

Unfortunately for Tom, according to the press he's already angered Merkel et al by moving EADS HQ fully to Tolouse, so he's starting off from a weak position.
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r2rho
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RE: BAE And Eads Cancel Merger Plans

Mon Oct 15, 2012 2:28 pm

This article in German cites some parts of a letter from Enders to employees:

http://www.airliners.de/management/s...s-rueckendeckung-fuer-enders/28240

EADS wird seinen eindrucksvollen Wachstumskurs im zivilen Luft- und Raumfahrtgeschäft fortsetzen»,
"EADS will continue on its impressive growth path in the civil air & space business".

Note that this sentence explicitly leaves out the defense systems division, Cassidian... there are a lot of question marks regarding the future of that division, which seems to be having a hard time competing against BAE, Thales, etc (let alone its American counterparts), and which likely would have been integrated into BAE had the merger gone through.

«Ich bin bereit einzugestehen, dass ich nicht mit so heftigem Widerstand gegen diesen Zusammenschluss gerechnet habe, vor allem nicht aus Berlin»,
I am willing to admit that I had not counted on such strong opposition, specially not from Berlin.

Can't say it more straightforward than that...
 
r2rho
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RE: BAE And Eads Cancel Merger Plans

Mon Oct 15, 2012 2:48 pm

This article in German cites some parts of a letter from Enders to employees:

http://www.airliners.de/management/s...s-rueckendeckung-fuer-enders/28240

EADS wird seinen eindrucksvollen Wachstumskurs im zivilen Luft- und Raumfahrtgeschäft fortsetzen»,
"EADS will continue on its impressive growth path in the civil air & space business".

Note that this sentence explicitly leaves out the defense systems division, Cassidian... there are a lot of question marks regarding the future of that division, which seems to be having a hard time competing against BAE, Thales, etc (let alone its American counterparts), and which likely would have been integrated into BAE had the merger gone through.

«Ich bin bereit einzugestehen, dass ich nicht mit so heftigem Widerstand gegen diesen Zusammenschluss gerechnet habe, vor allem nicht aus Berlin»,
I am willing to admit that I had not counted on such strong opposition, specially not from Berlin.

Can't say it more straightforward than that...