The proposed 60-40 merger of EADS and BAE Systems was called off after management in both companies miscalculated the reaction of governments and shareholders. Paris and Berlin proved unwilling to give up their stakes in EADS, or reduce them to a degree that was acceptable to the two merging companies, to London, and (perhaps) to Washington.
Senior officials from EADS and BAE Systems are hastening to secure agreement for their proposed 60-40 merger from key governments, after the premature leaking of the deal. They must specify full details by October 10, to satisfy UK stock market rules.
At first glance, the proposed merger between EADS and BAE should not pose problems for competition regulators on either side of the Atlantic, from a defense perspective. There is very little overlap between the businesses. “It’s a great strategic fit,” one EADS official told AIN. However, that may not stop companies such as Finmeccanica or Thales from raising questions about the consolidation of first-tier defense contractors in Europe.
On the day after the merger talks between EADS and BAE Systems became public this week, the French and German governments signed a cooperation agreement on future medium-altitude long-endurance (MALE) UAVs. The two nations will develop a common operational requirement, and may also jointly operate an interim solution. Both countries currently fly the Israeli Heron 1 system in Afghanistan, but their respective air forces have been pressing for a replacement.
BAE surprised stock markets on September 12 with sudden announcement of a planned merger with its fellow European aerospace and defense group EADS, which confirmed a few hours later that the deal is being discussed. Under UK stock market rules, the merger would have to be agreed or abandoned by close-of-business on October 10.
BAE Systems, not Lockheed Martin, will upgrade the avionics of some 130 Korean air force F-16C/Ds. A spokesman for Korea’s Defense Acquisition Program Administration (DAPA) said in Seoul that his agency will request the BAE package as a U.S. foreign military sale (FMS).
European governments have reached a crossroad in the potential development of next-generation unmanned aerial systems that could challenge current Israeli and U.S. leadership in this field. The British and French defense ministers will meet in London on Tuesday, July 24, to assess the Anglo-French Defence Agreement.
AIN’s team of editors and reporters provided full coverage of the Farnborough International airshow this week. All the stories can be found online.
Competition in the F-16 upgrade market is heating up, with Boeing joining BAE Systems in challenging Lockheed Martin’s dominance as OEM. Boeing is touting the experience it gained recently in converting F-16s to unmanned drones for the U.S. Air Force. BAE Systems continues to emphasize its 270-aircraft upgrade for the U.S. National Guard, as a basis for securing international work.
The long-delayed solicitation for fixed-wing basic training aircraft to serve in the UK’s Military Flying Training System (MFTS) will be issued within 40 days.