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EADs-BAe merger case analysis (Corporate Finance)
Finance & Accounting
Pages 7 (1757 words)
EADS-BAE MERGER CASE ANALYSIS Name Institution Date Introduction The previous declaration by BAE systems plc and EADS N.V to merge on 12th September 2012 was put off on 10th October, 2012. The two firms were made to merge based on a dual listed company structure but the discussions were put off based on various reasons.
Even though the companies had not revealed benefits and a detailed business structure for the merger it is believed that negotiations with the respective states had not reached that level. The two firms were optimistic that the merger would have built a strong case to pass to the owners of the business. This discussion will address the valuation of the two firms using various models, the motivation and strategy evaluation, the response in the security market and corporate governance analysis to seek ways of making such moves successful and establish the reasons behind the failure. Strategy and Motivation Analysis The motivation of the proposed merger were based on global rivalry, share in the market by the firms, the level of complimentarity, variation in the industrial structure like offsetting of the monopoly. BAE was also believed to be the springboard that would enable EADS to have its biggest jump it craved for in the Northern American continent (Jane's Defense Industry, 1900; p. 75). BAE has a chief role in the manufacture of military equipment as it was noted that 95% of the BAE systems total sales were related to military sales. ...
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