11-Oct-2012 10:54 AM

BAE Systems and EADS end discussions regarding possible combination

BAE Systems and EADS announced (10-Oct-2012) they have decided to terminate their discussions in relation to a possible combination of their businesses through a dual listed company structure. The companies stated it has become clear the interests of the parties' government stakeholders cannot be adequately reconciled with each other or with the objectives BAE Systems and EADS established for the merger. The companies stated the merger was based on sound industrial logic and represented a unique opportunity to create a combination from two strong and successful companies greater than the sum of the parts. Discussions with the relevant governments had not reached a point where both companies could fully disclose the benefits and detailed business case for the merger. BAE Systems and EADS were clear they would proceed with a merger of their businesses only if a transaction structure could be created that aligned the interests of the parties' stakeholders and received their support. Between themselves, BAE Systems and EADS had agreed the principal terms of the merger, subject to the approval of their respective Boards, including:

  • The commercial terms of the merger;
  • The legal structure of the merger;
  • Governance arrangements which would enable the combined business to operate in a normal commercial manner;
  • A unified management and Board structure;
  • The strategy for the combined business;
  • Near-term dividend policy;
  • The cost saving and revenue benefits of the combination and associated implementation plan. [more - original PR]

BAE Systems: "We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders. We believe the merger presented a unique opportunity for BAE Systems and EADS to combine two world class and complementary businesses to create a world leading aerospace, defence and security group," Ian King, CEO. Source: Company statement, 10-Oct-2012.

EADS: "It is, of course, a pity we didn't succeed but I'm glad we tried. I'm sure there will be other challenges we'll tackle together in the future. EADS will continue on its international growth path and our shareholders can continue to expect profitable growth, excellent liquidity and programme execution based on a strong order book," Tom Enders, CEO. Source: Company statement, 10-Oct-2012.

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