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14 Sep 12. William Swanson, chief executive of Raytheon Co (RTN), said a possible merger of European defense giants EADS (EAD.PA) and BAE Systems (BA.TO) could help his own company boost its share of important defense markets. Swanson, who helped Raytheon integrate its own complex acquisitions during the last big wave of consolidation in the 1990s, told a Morgan Stanley investor conference on Thursday that it was hard work merging separate entities like those of EADS and BAE.
“We’ll probably increase Raytheon’s market share,” he said, adding, “When you put companies together in a contracting marketplace, your team has their head down, trying to figure out how to make things work rather than looking up and figuring out how to make an opportunity out of the situation.”
With EADS and BAE occupied with the merger, Raytheon could see some additional opportunities to win orders, Swanson said. He said it would be critical for EADS and BAE to truly integrate the two businesses, or risk losing out on the expected synergies and improved profit margins. (Source: Reuters)

14 Sep 12. German Chancellor Angela Merkel said on Thursday a possible merger between Airbus owner EADS (EAD.PA) and Britain’s BAE Systems
(BA.TO) was being investigated. In what could produce the biggest shake-up in Europe’s aerospace and defense sector in more than a decade, the two companies said on Wednesday they were in advanced talks. A German economy ministry spokesman said earlier on Thursday the government had been informed about the plans and had been asked to give its support. The government was looking into all relevant issues related to a possible merger. (Source: Reuters)

13 Sep 12. BAE Merger Talks Unsettle. Possible merger of defense contractor BAE and Airbus maker EADS may look good on paper, but shareholders are unimpressed. WSJ’s Dana Cimilluca and Daniel Michaels tell us why. PARIS—Airbus parent European Aeronautic Space & Defence Co. EAD.FR has left its minority shareholders cold with its plan to boost its exposure to the politically sensitive defense sector via a merger with BAE Systems PLC. BA.LN EADS and the U.K.’s BAE said Wednesday they are in advanced merger talks to create the world’s largest aerospace-and-defense company by revenue, leapfrogging U.S. rivals, though they cautioned the discussions could still fall apart. The combined entity would have a market valuation of nearly $50bn and revenue of about $90bn. Investors reacted swiftly on Thursday: Shares in EADS fell sharply in early trading, while those in BAE gave up much of their gains Wednesday after news of the deal broke. With the merger talks still under way, analysts questioned the business logic of the tie-up for EADS shareholders, and noted the risks should the deal fall apart, even though the companies appear to be a good fit on paper. EADS is strong in civil aerospace through Airbus, potentially complementing BAE’s strong defense focus across air, land and marine weapons systems.
“Whilst EADS has plenty of cash, we doubt if doubling up on defense at this point makes sense to shareholders,” said Robert Stallard, an analyst at RBC Capital Markets. (Source: WSJ)

13 Sep 12. BAE puts conditions on EADS talks. BAE Systems has warned EADS that it will walk away from merger talks unless the combined European champion in aerospace and defence was allowed to operate as a normal company without political interference. BAE is also insisting that the combined entity’s defence business would have to be based in the UK if the plan, news of which was leaked on Wednesday before the structure was finalised, is to go ahead. The management of EADS has indicated it would be willing to de-politicise the company, but it remains far from certain that Paris, in particular, and Berlin would agree to give up their strategic stakes. The uncertainty over the fate of the deal as well as the lack of clarity on possible cost-savings and strategy prompted deep investor scepticism. Shares in EADS f

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