A defence dream born out of necessity

Alexander Nicoll, Director of Editorial, wrote an opinion piece in the Financial Times on the possible merger of aerospace companies EADS and BAE Systems.

EADS and BAE Systems are currently in talks to join forces – a deal Nicoll says is driven by a decline in western defence spending. In Europe, future production runs for aircraft are likely to be small. EADS and BAE both have business interests in other defence areas, but they can get a better ‘global market clout’ by making a combined attack on remaining budgets. The US market will remain an important source of business, and the Asia and Middle East will also be key markets in which the merger will help. But as Nicoll points out, there will be challenges for the resulting body – both from declining defence budgets (including potential additional cuts to the US armed forces), and from the merger itself, which will need to meld two different corporate cultures. ‘EADS is itself a case study in how difficult and time-consuming such a process can be,’ says Nicoll.

Read the full article here.

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