BAE, EADS call off merger talks amid political opposition
BY SYLVIA HUI & SARAH DILORENZO Associated Press
Thursday, October 11, 2012
10/11/12 at 3:36 AM
LONDON - A deal to create a European defense and aerospace giant to rival Boeing Co. collapsed Wednesday when BAE Systems and EADS NV called off merger talks in the face of government objections.
The companies said they had "decided to terminate their discussions" over the proposed $45 billion tie-up because of conflicting interests between the British, French and German governments.
"It has become clear that the interests of the parties' government stakeholders cannot be adequately reconciled with each other or with the objectives that BAE Systems and EADS established for the merger," the companies said in a statement.
The proposed merger between Britain's BAE and Franco-German EADS, the parent of Airbus, would have created a company with a market value just shy of Boeing's.
But from the start, investors were skeptical about the deal because of the political disagreements. All three governments had to approve the deal for it to go ahead.
"It's not up to me to regret or rejoice," French President Francois Hollande said. "The French state as shareholder made known a certain number of arguments, of conditions. Our German friends had a certain number of criteria that were important to them. The British did the same. And the companies came to their conclusion."
The companies confirmed the end of their discussions just hours before a deadline on whether to go ahead with the merger, ask for more time or call it off.
The chief executives of both companies had emphasized that the merger was sought not out of necessity, but in the hope of leapfrogging Boeing to the number one spot.
Tom Enders, the chief executive of EADS, and his counterpart at BAE, Ian King, both expressed disappointment at the outcome.
"It is, of course, a pity we didn't succeed but I'm glad we tried," said Enders.
Original Print Headline: Politics derail European defense merger
The first Astute class nuclear submarine rolls out at the BAE Systems production plant in Barrow-in-Furness, England, U.K., in June 2007. Defense and aerospace companies BAE Systems PLC and EADS have called off merger talks in the face of government objections. Associated Press file