EADS, Dassault… and BAE?

Towards the end of last year a proposed merger between BAE Systems and EADS was ditched due to the difficulties of persuading the relevant governments to reduce their interest in the resulting company.

Subsequent questions from shareholders who EADS to operate like a “normal company” want it to divest it’s holdings in Dassault Aviation.

[browser-shot width=”600″ url=”http://www.flightglobal.com/news/articles/in-focus-dassault-question-raises-its-head-at-eads-389269/”]

As pointed out in the Flight Global article above France would be unlikely to allow a purchase of EADS share in Dassault outside of a French owner, however given the fledgling Anglo-French (Franco-British?) military agreements would some form or BAE Systems  / Dassault Aviation arrangement be worth consideration?

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A sixth generation engineer from a shipbuilding, locomotive and aerospace family with dual nationality. Studied Master of Physics with Space Technology. Now a specialist in the development and design of distributed hardware/software systems together with large dataset analysis algorithms.

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Bob

Absolutely, if it actually functioned as one company and and its European customer nations could act as one customer- fat chance of that happening though.

Chris

Hmmm. I was unsure of the EADS courting a while back, the Dassault tie up is even more confusing. EADS is a much bigger dare I say more exciting concern than Dassault – nothing wrong with Dassault, its just much smaller and firmly French where EADS – or Airbus as they now want to be known – is evidently a European wide company of many many parts. But the problem as I see it is on the BAE side. For years now BAE has been paddling its corporation across the Atlantic as fast as it can; a major proportion of the BAE empire is formed of US corporations and divisions it has bought, to the point that a few years ago there were mutterings it wanted to move its head office over to the US where the defence contracts were bigger and more numerous. Suddenly throwing a drag-anchor into Europe seems disconnected; like it doesn’t know whether to go west or go east but it knows it wants to go somewhere…

So. Does BAE stand for the Big American Engineering Co. or not? Does it think it will be a stronger bridge between the US and the EU markets if it is stronger in both places? Was the US focus an aberration and the company wants to pull itself back from America? Is it considering a parting of the ways between Big American Engineering Co. and the British Albion Europa Co. and just needs a bit more gravitas on the European side? For each of these possible reasons a tie-up with EADS seemed to make more sense than a tie-up with the smaller Dassault.

While I see some good honest engineering advantages in bringing Dassault and the UK businesses of BAE together, I’m afraid I struggle to see the corporate advantage. But I am very willing to be educated on this matter…

Jennings

BAES = BRITISH AND EUROPEAN SOTHERE

Hannay

BAES and EADS made sense as it would fuse a defense company with a civil one. Airbus isn’t after the same market as BAES but as the whole then there is more capital available for new ventures.

BAES and Dassault are direct competitors. The only thing Dassault brings to the table is it’s business jet arm, which isn’t doing too well and is unlikely to be a major factor in the future.

Now a new joint company along the lines of SEPECAT to produce a new UCAV seems a bit more sensible.

Agree the main attraction for BAES was and remains to form an alliance with a counter-cyclical earner in civil aerospace, of which EADS was prime. Ironic, really, that it sold its share in Airbus a decade earlier to follow a path of aggressive transatlantic acquisition, concentrating on defence.

At the time Airbus looked like a high risk, politically bedevilled money sink which would lose against Boeing. They got that one spectacularly wrong, well except for the political bit.

The EADS merger failed on the rock of political interference, unexpectedly from Germany not France, but curiously Tom Enders has subsequently succeeded in removing (I think) most if not all the underlying barriers, such that the deal could go through on the original terms now…
They may just be waiting.

I still feel that a merger with Bombardier would be more interesting for BAES than Dassault.

Mehmet EMRE

Why’d they apply for a foreign worker when there’s a local one? Meantime here are some cool Eurofighter photos: http://savas-ucaklari1.blogspot.com/2013/08/eurofighter-typhoon-resimleri.html

Fatman

BAES seems to be on the gradual course of relocating to the real market (i.e. the USA) and may in time become an American company. Might make more sense to think of a merger with a major US company. Northrop Grumman has the weakest defence aviation sector, which might seem a logical fit, but of course there are long standing ties with Lockheed. Perhaps we will eventually have Lockheed Martin BAES plus its LMBAES (UK) subsidiary. Dassault is not large enough to take over BAES and the French government (who are not open to market force pressures and have a degree of long-sightedness and strategic planning, unlike some we could name) will not allow a foreign takeover. of their crown jewels. BAES wrongly bet the boat on becoming a specialist defence company, while the real future spending will be in civil aerospace and space technologies. With a declining UK defence budget and R&D spend I suspect they made the wrong call.

arthurb

Personally, I have always thought that BAe’s desire to become American was a deeply flawed strategy (for e.g. : competing in bigger companies’ back yard – lack of trust from US Gov.), but then again EADS + BAe doesn’t seem to make a great deal of sense either (duplication plus vested, national, interests). But what about BAe + Dassault + Finmeccanica? Or even just Bae and Finmeccanica?

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