BAE Systems – EADS Merger Collapses

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After weeks of talks, a proposed merger between EADS and BAE Systems – two companies with operations in Huntsville – has been called off.

Airbus’ parent company and the British defense firm had been discussing a $45 billion merger, which would have created the world’s biggest aerospace and arms group. The change could have brought a shakeup for both employees and management structure.

In the end, EADS and BAE were unable to get the governments of Britain, France and Germany to agree to their plans. The stakes France and Germany would have held in the combined company were key. Britain wanted assurances any European government ownership would not upset their major client, the U.S. government.

EADS North America’s presence in Huntsville centers mostly on the management of the corporation’s light utility helicopter contract with the United States Army. BAE Systems in Huntsville also has a major contract with the Army to oversee the development of a next-generation combat vehicle.

So what happens now? One industry analyst thinks a cross-Atlantic tie-up might work but may not provide BAE the same advantages of an EADS merger. David Reeths, of IHS Jane’s, said “I know a lot of people have been looking to the U.S. for a potential partner and large firms like General Dynamics, Northrop Grumman or even Raytheon have been mentioned in some of the reports, but unfortunately those firms already have significant presence in the United States.”

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