Boeing defence CEO says BAE-EADS merger needs scrutiny

WASHINGTON Wed Sep 19, 2012 11:10pm BST

Boeing Defence, Space and Security Chief Executive Dennis Muilenburg speaks during the Reuters Aerospace and Defense Roundtable in Washington September 4, 2012.REUTERS/Yuri Gripas

Boeing Defence, Space and Security Chief Executive Dennis Muilenburg speaks during the Reuters Aerospace and Defense Roundtable in Washington September 4, 2012.

Credit: Reuters/Yuri Gripas

Quotes

   

WASHINGTON (Reuters) - A merger of Europe's EADS and Britain's BAE Systems Plc would raise national security and industrial questions and should be reviewed carefully by government regulators, the head of Boeing Co's defence operations said on Wednesday.

"We would expect that to be subjected to all the normal regulatory scrutiny," Dennis Muilenburg told Reuters at the annual Air Force Association conference. "There are ... national security questions, industrial questions, and those will have to be dealt with."

"This is a serious matter that needs to be scrutinized," Muilenburg said, adding that it was difficult to comment further until the two companies released details of the proposed structure of the combined company.

EADS and BAE said last week they were in advanced talks about a possible $48 billion (29 billion pounds) merger, which would create a global aerospace and defence giant.

Boeing Chief Executive Jim McNerney last week said his company was not threatened by the discussions, but the talks reflected the start of global consolidation in the defence industry. At the time, he declined to comment further, saying he had not studied the issue.

Deputy Defence Secretary Ashton Carter told the conference earlier on Wednesday that the Pentagon had been told informally about the possible merger, but would wait to carry out a formal review until it received a proposal from the companies.

He said the department's industrial policy was aimed at allowing companies to make individual business decisions about mergers that allowed them to be financially successful, with each proposed merger to be reviewed on a case-by-case basis, taking competition and security factors into consideration.

"We understand that our industry needs to be technologically successful. It needs to be dynamic. It has to be financially successful because it has to exist in the capital markets," Carter said.

"What is economically sensible for them is going to deliver good value and productivity growth for the department," Carter said, adding that the BAE-EADS deal was just one of many transactions under consideration by the industry.

U.S. companies are evaluating whether the possible merger would affect their close ties with BAE, which is a key supplier for many other companies in both the commercial and defence sectors. EADS also has partnerships with many U.S. companies.

(Reporting by Andrea Shalal-Esa; editing by Gerald E. McCormick and Matthew Lewis)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
Raymond.Vermont wrote:
I dont know, but somehow Boeing-BAE sounds so much more natural sounding in rolling off the tongue than EADS-BAE or BAE-EADS…

If it sounds right, it is right is always a great rule of thumb!

Sep 19, 2012 8:28pm BST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.