GEC weighs options on aerospace tie-up
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.
Revealed: Devastating impact of 'bedroom tax' sees huge leap in demand for emergency hardship handouts for tenants
Notes from a small island: Is Sealand an independent 'micronation' or an illegal fortress?
You thought Ryanair's attendants had it bad? Wait 'til you hear about their pilots
Revealed: Eerie new images show forgotten French apartment that was abandoned at the outbreak of World War II and left untouched for 70 years
Five-year-old British girl dies in a pool at Coral Sea Waterworld Hotel in Egypt's Sharm el-Sheikh resort
- 1 Stoke City investigate 'religious abuse' after 'pig's head is found in Kenwyne Jones' locker'
- 2 Gove’s lesson: spare the comma, spoil the child
- 3 Heading for America? Prepare for the longest US immigration queues ever
- 4 Grace Dent on TV: Extreme Couponing, My Strange Addiction, and Here Comes Honey Boo Boo, TLC
- 5 Join Ryanair! See the world! But we'll only pay you for nine months a year
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£550 - £600 per day: Orgtel: Fidessa Analyst / PM - Banking - London - Up to £...
£450 - £500 per day: Orgtel: Sourcing Manager - Banking - London - Up to £500p...
To be discussed at interview.: Queen Elizabeth's School: An experienced and ef...
£294.05 - £330.92 per day + 150 per day travel and accommodation: Orgtel: A le...