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Business | September 13, 2012

BAE Systems and EADS in talks to merge

BAE Systems and EADS, the two largest European defence and aerospace companies, have confirmed that they are in talks to merge.
Updated; September 13, 2012 10:20 AM
In the proposed merger, EADS would hold sixty percent of the merger, with BAE Systems holding the rest.

“The discussions between the parties envisage that BAE Systems shareholders would own 40% and EADS shareholders 60% respectively of the enlarged group. It is contemplated that there would be a unified board and management structure with identical boards and executive committees at each of BAE Systems and EADS,” a statement by BAE Systems said.

A merger would create a company large enough to compete with Boeing for the largest in the world. Combined 2011 sales of EADs and BAE Systems was 96 billion USD.

BAE Systems said that discussions with a variety of governments have begun regarding the implications of the merger.

"Under the transaction structure being discussed between the parties, BAE Systems and EADS envisage that certain of their defence activities would be ringfenced with governance arrangements appropriate to their strategic and national security importance, particularly in the USA, given the importance of that market to the enlarged group. In addition, subject to receiving appropriate shareholder approvals, the parties envisage issuing special shares in BAE Systems and EADS to each of the French, German and UK governments to replace the existing UK government share in BAE Systems and the stakeholder concert party arrangements in EADS," said BAE Systems.

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