EADS merger with BAE would be good for investors

Published:  20 Sep at 10 AM

A proposed tie-up between BAE Systems in the UK and aeronautical giant EADS would be positive for investors in both companies, claims EADS chief executive Tom Enders. He said that a rise in BAE shares and a drop in the value of EADS stock immediately following an announcement of the proposal happened because investors had been surprised.

In a letter sent out to EADS employees in Europe and the UK, Enders explained that he understood a merger of the two companies would take some hard work and that there might be some difficulty convincing shareholders. He added that he is convinced that a tie-up will create a stronger platform for growth.

If a deal were to go ahead the company formed would be the largest defence contractor on the planet. Politicians are currently examining the proposal in terms of national security interests and governance. Enders said that discussions with all the relevant governments were already at an advanced stage.

The EADS boss also hinted that if the two companies were to join forces there would be no significant job losses. He explained that because there was little overlap between the two firms which tended to compliment each other the impact on staff would be minimal.

He said that a deal would help both companies to grow on the global stage and stressed the importance of internationalisation in the defence industry. The deadline set by the UK’s Takeover Panel for the details of the deal to be finalised is 10 October.