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Finance & Accounting
Pages 8 (2008 words)
BAE & EADS Proposed Merger [Name] [Course Title] [University] [Instructor Name] [Date] Contents •Introduction: •Strategy and motivation analysis •Stock market response analyses based on share movement and synergy multiples •Synergy analysis •Valuation •Corporate governance analysis •Conclusions Introduction EADS, which is the owner of Airbus and BAE system, which is the Britain’s largest manufacturing employer, announced their 29.8bn pound merger on 12th September 2012, a deal which could give Germany and France an interest in the UK’S major defense contractor.
On the flip side, the deal would lead to political among other complexities. This report will give an analysis of the issues surrounding the proposal for merger of the two companies. Strategy and motivation analysis Invesco criticized the proposed deal citing poor terms, state interference and lack of strategic underlying principle. The problems that BAE has raised includes the share buyback programme , possible deviation from its generous dividend payout as well as the doubts imposed by inviting Germany and French stakeholders in the deal. The sharp cut in the defense spending by the U.S. is a big blow for EADS and BAE, but BAE is likely to suffer most because it is deeply exposed to the U.S. defense market. Furthermore, BAE is experiencing a serious reduction in the demand for the equipment it supplies for the US military, which are currently preparing to pull out from Afghanistan. Additionally, the firm is likely to suffer a big blow following the down-turn of the demand for the Eurofighter Typhoon fighter jet (Ranscombe, 2012). Figure 1: EADS DPS trend since 2007. ...
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