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Thursday, September 20, 2012
EADS and BAE Systems discuss merger to create world’s largest defense and security group
According to DefenseUpdate, BAE Systems and EADS would actually operate under “a dual listed company structure” under which they would both be operating as one group while still being listed separately on exchanges.
The companies stated that certain defense activities could be ringfenced (financially separated) in accordance with agreements with governments, the United States of America in particular, due to their strategic and national security importance and due to “the importance of that market [the USA] to the enlarged group.”
“In response to BAE systems’ announcement that came after sudden share price movement in the London Stock Exchange, EADS confirmed it is in talks with BAE but cautioned that the matter is subject to the approval of the Board of EADS and there can be no certainty that these discussions will lead to a transaction,” Defense Updatereports.
The announcement from BAE stated that they will hold 40% of the group’s shares while EADS will own 60% and the board and management structure will have “identical boards and executive committees at each of BAE Systems and EADS.”
If shareholders approve, BAE Systems and EADS might give the British, French and German governments special shares in the companies in order “to replace the existing UK government share in BAE Systems and the stakeholder concert party arrangements in EADS.”
The discussion of a merger between BAE and EADS isn’t all that surprising since they already work together closely evidenced by their shared ownership of Eurofighter GmbH, the company behind the Eurofighter Typhoon, and their joint ownership of the MBDA missile development and manufacturing company.
That being said, this potential merger is not in any way minor. If it happens, they would create the largest aerospace, defense and security group on Earth. They would have at their disposal major manufacturing centers in America, Britain, France, Germany and Spain.
By combining they would increase their business volume to twice that of even the largest of today’s defense contractors, namely, Lockheed Martin.
“BAE Systems and EADS operate highly secure and sensitive defense businesses in the USA, the UK, France, Germany, Spain, Saudi Arabia and Australia, amongst other countries. Discussions have therefore been initiated with a range of governments about the implications of the potential transaction,”Defense Update reports.
“BAE Systems and EADS believe that the potential combination of their two businesses offers the prospect of significant benefits for customers and shareholders of both companies,” the announcement from BAE said. “These benefits include cost savings, such as from procurement and sourcing efficiencies available to the enlarged group, and substantial new business opportunities.”
Of course the benefit they don’t mention is a near complete dominance of the entire defense industry and the ability to choke out the competition. Unfortunately, it seems that these corporations realize that there is a long future in the business of war profiteering and unless the people of the world step up and start demanding an end to the perpetual wars we’ll have to continue to witness the constant expansion of these megalithic corporations.