LONDON, 12 Oct. 2012. BAE Systems and EADS have decided to terminate discussions of a possible combination of their businesses. The possible combination was announced on September 12, 2012 and would have formed the largest defense company in the world, had it occurred.
The merger was ultimately stopped by the inability of government stakeholders in each company to reconcile their interests with each other and the objectives that BAE and EADS established for the merger. After weeks of engagement with the parties' government stakeholders, BAE and EADS have decided to terminate the discussions and continue focusing on their own businesses.
Ian King, Chief Executive of BAE Systems, said "we are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders. We believe the merger presented a unique opportunity for BAE Systems and EADS to combine two world class and complementary businesses to create a world leading aerospace, defence and security group."
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Tom Enders, Chief Executive of EADS, said "it is, of course, a pity we didn't succeed, but I'm glad we tried."
Both BAE and EADS believe that the merger was based on sound industrial logic and would have produced a combined business that would have been a greater force for competition and growth across both the defence and commercial aerospace sectors.
BAE and EADs had agreed to the principal terms of the merger, subject to the approval of their respective boards, including the commercial terms of the merger, the legal structure of the merger, governance arrangements to enable the business to operate in a commercial manner, management and board structure, business strategy, near-term dividend policy, and the revence benefits of the combination.