Ter­mi­na­tion of talks on pos­si­ble merger of BAE Sys­tems and EADS


Fol­low­ing the an­nounce­ments made by BAE Sys­tems Plc and EADS N.V. on Septem­ber 12, 2012 in re­la­tion to a pos­si­ble com­bi­na­tion of their busi­nesses through a dual listed com­pany struc­ture, BAE Sys­tems and EADS an­nounce that they have de­cided to ter­mi­nate their dis­cus­sions.

BAE Sys­tems and EADS be­lieve that the merger was based on a sound in­dus­trial logic and rep­re­sented an op­por­tu­nity to cre­ate a com­bi­na­tion from two strong and suc­cess­ful com­pa­nies greater than the sum of the parts. The merger would have pro­duced a com­bined busi­ness that would have been a greater force for com­pe­ti­tion and growth across both the com­mer­cial aero­space and de­fence sec­tors and which would have de­liv­ered tan­gi­ble ben­e­fits to all stake­hold­ers.

Dis­cus­sions with the rel­e­vant gov­ern­ments had not reached a point where both com­pa­nies could fully dis­close the ben­e­fits and de­tailed busi­ness case for this merger.

BAE Sys­tems and EADS are, how­ever, con­fi­dent that th­ese would have pro­vided a strong case to take to their share­hold­ers.

From the out­set of dis­cus­sions be­tween the par­ties, both BAE Sys­tems and EADS were clear that 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 strong sup­port. BAE Sys­tems and EADS worked con­struc­tively to de­liver such a struc­ture.

Ian King, Chief Ex­ec­u­tive of BAE Sys­tems, said: “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.

“How­ever, our busi­ness re­mains strong and fi­nan­cially ro­bust. We con­tinue to see op­por­tu­ni­ties across our plat­forms and ser­vices of­fer­ings and in the var­i­ous in­ter­na­tional mar­kets in which we op­er­ate. We re­main com­mit­ted to de­liv­er­ing to­tal share­holder value, in­clud­ing a pro­gres­sive div­i­dend pol­icy, and look to the fu­ture with con­fi­dence.”

Tom Enders, Chief Ex­ec­u­tive of EADS, said: “I’d like to thank ev­ery­body who sup­ported us, in par­tic­u­lar all the col­leagues at BAE Sys­tems and EADS for all their hard work and ded­i­ca­tion to this project in re­cent months. A spe­cial thank-you goes to Ian King for his trust and part­ner­ship. 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.”

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