EADS and BAE confirm merger 'discussions'

Defence giant BAE systems and Airbus manufacturer EADS have confirmed they are in talks regarding a potential merger.

The two companies, which have a long history of collaboration on projects such as the Eurofighter, would together create the world’s biggest aerospace and defence company, with combined sales of £60 billion and around 220,000 staff.

If the merger goes ahead, the two companies would create an industry giant which would overtake rival Boeing in sales. According to news reports, the potential tie-up would see BAE take a 40 percent stake and EADS a 60 percent stake in the new firm.

The new company would be expected to be based in London and the Netherlands, creating a world leading international aerospace, defence and security group. It would include centre of manufacturing is the UK, USA, France, Germany and Spain, in addition to Australia, India and Saudi Arabia.

In an online statement, BAE said the potential combination of the two businesses is expected to offer ‘significant benefits for all stakeholders’, and is hoped to provide ‘greater innovation, long term financial stability, and an extended market presence, which will enable them to compete even more effectively on the world stage.’

The statement continues to clarify that there is no certainty whether the discussions will ultimately lead to a transaction, and that any proposal would require approval from the Boards of each company amongst other things.

Under British law, the companies have until Oct. 10 to decide if they are going ahead with a merger.