UK manufacturing took a knock today with the announcement a $45bn (£28bn) merger between aerospace and defence firms BAE Systems (Britain’s largest manufacturer) and EADS has been cancelled.
The proposed merger collapsed following political and shareholder pressure. While the companies themselves claimed to have agreed the principal terms of the merger, they faced opposition from the German, French and UK 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..
“BAE Systems and EADS have therefore decided it is in the best interests of their companies and shareholders to terminate the discussions and to continue to focus on delivering their respective strategies.”
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 and look to the future with confidence.”
Tom Enders, EADS chief executive, said: “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.”
BAE has a plant at Rochester Airport employing 1,400 people making head-up displays for Eurofighter aircraft. MPs had expressed concern about the merger, fearing it would lead to job losses. While employees at Rochester and elsewhere had been assured their jobs would be safe, there were understandable fears these promises would prove hollow once a merger had been completed.
A lucky escape or another chink in the armour of UK manufacturing?
