GEC weighs options on aerospace tie-up
Monday 14 December 1998
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.
- 1 Humans of New York image of crying gay teen receives best response from Ellen DeGeneres
- 2 People all over the world are getting semicolon tattoos to draw attention to mental health
- 3 Greek debt crisis: Yanis Varoufakis's funniest (and most memorable) quotes
- 4 The biggest first date turnoff has been revealed
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
Humans of New York image of crying gay teen receives best response from Ellen DeGeneres
Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
Man dies instantly after shooting firework from top of his head
Isis schoolgirl Amira Abase who fled London to join terrorists in Syria mocks victims of Tunisia massacre
Father faces deportation to Thailand after 27 years in Britain for two 'stupid crimes'
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...