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BAE Systems-EADS Merger Plan - Essay Example
Author : schneiderewell
Finance & Accounting
Pages 4 (1004 words)
As market competition is becoming more and more intense,companies are to take up innovative strategic moves in order to ensure their long-term sustainability.The concept of merger is widely employed today with intent to defend stiff market competition …
However, unification of two struggling companies may not always guarantee their resurrection. This paper will specifically discuss whether or not mergers make economic sense with particular focus given to the reaction of UK, French, and German governments to the BAE/EADS merger. BAE Systems-EADS merger plan In the last year, Britain’s BAE Systems planned a €38bn (?30.4bn) merger with its rival European Aeronautic Defence & Space Co (Franco-German maker of Airbus civilian jets). According to a Telegraph report by Ebrahimi and Monaghan (2012), the planned merger would have formed the world’s second biggest aerospace and defence company after Boeing. If the merger had become successful, the merged entity would have achieved combined sales of ?60bn and employed 220,000 people worldwide (ibid). In addition, the planned venture would have contributed to Europe’s military efforts, developed British nuclear submarines and own airbus, and attained the status of biggest plane manufacturer in the world (ibid). Many industry analysts supported this deal as they believed that the planned merger would provide the companies with the synergies of combined operations. Proponents of this strategic plan pointed out that BAE systems have strong presence in the US market where the government is one of the largest and potential customers. ...