EADS, BAE Systems contemplating possible merger

Although facing approval of the boards of both companies, as well as several regulatory agencies, the combination of EADS and BAE Systems would create one of the world's largest aerospace companies.

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BAE Systems (London, U.K.) reported on Sept. 12 that it and European aerospace manufacturer EADS (Leyde, The Netherlands) are in discussions about a possible combination of the businesses. The potential combination would create a world-leading international aerospace, defense and security group with substantial centers of manufacturing and technology expertise in the U.K., USA, France, Germany and Spain as well as in Australia, India and Saudi Arabia.

In a statement, BAE Systems says it and EADS believe that the potential combination of the two businesses offers significant benefits for all stakeholders, over and above their individual business strategies, which both businesses continue to execute strongly. In particular, they believe that the combination of the two complementary businesses offers the opportunity of greater innovation, long-term financial stability, and an extended market presence, which will enable them to compete even more effectively on the world stage.

Any agreement on the terms of a potential combination will require approval by the Boards of both BAE Systems and EADS, and would be subject to, amongt other things, a number of governmental, regulatory and shareholder approvals. There is no certainty at this stage that the discussions will ultimately lead to a transaction.