GEC weighs options on aerospace tie-up

GEC said yesterday that it was considering its strategic options following a wave of weekend press speculation suggesting that it is trying to muscle in on British Aerospace's pounds 14bn deal with Dasa, the German aerospace giant.

A statement issued yesterday said: "The group confirms that it has been in intense discussions for several months with a number of major participants in the global defence industry. GEC expects to make a decision on its future strategic course soon."

GEC added that its decision would be based on industrial logic, not political considerations. This is a reference to the British government, along with those of France and Germany , encouraging a re-structuring of the European defence sector to enable it to compete more effectively with the major US players.

BAe and Dasa have been in talks for several months over a full merger and an announcement had been expected this week. However, it appears that in a last ditch attempt to play a part in the discussions, Lord Simpson, GEC's managing director, has talked to Sir Richard Evans, BAe's chairman, about a link-up that would include the two British groups. Talks are understood to have focused on the possibility of combining GEC's Marconi's electronics defence division with a merged BAe-Dasa.

The talks are taking place a backdrop of a rapidly consolidating global defence industry. US giants such as Lockheed and Northrop Grumman are looking at opportunities in Europe while the European defence sector is under pressure from European heads of state to strengthen the industry's competitive position with mergers and alliances.

GEC is looking at expansion opportunities in the US and is already a major player there. It has $2.5bn of defence sales in America, equivalent to 40 per cent of group defence sales. It also has 20,000 US workers.

GEC has a range of strategic options open to it. It could link up with a US rival such as Lockheed or Northrop; seek a link with Thompson-CSF of France; or follow the path of domestic integration with BAe.

Defence experts have suggested that BAe and Dasa could join forces to create the core of a consolidated European Aerospace and Defence Company (EADC) and then bring GEC's Marconi Electronics into the partnership at a later stage. "We are talking about the first few faltering steps that can be made to an EADC. Which of the steps come first does not really matter," one observer said.

BAe has said that a bi-lateral merger should be just the start of the creation of a larger entity. Its favoured outcome is for an EADC to embrace BAe, Aerospatiale of France, and Dasa, along with Dassault (Europe's second biggest military aircraft firm behind BAE), Spain's Casa and Sweden's Saab. While GEC may be keen on gaining a foothold in a BAE-Dasa alliance, some say the British government would prefer there to be two separate defence groups with European links rather than one combined entity.

Shares in GEC surged at the time of its interim results at the beginning of December when it said that it could be just weeks away from a major defence deal.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Stockbroker

£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence