BAE head rules out US merger for three years

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The Independent Online

The head of BAE Systems in the United States has ruled out a transatlantic merger involving the UK defence contractor and one of its big American competitors for at least the next three years.

Mark Ronald, chief executive officer and president of BAE Systems Inc, said that the political mood in Washington was not favourable to any further consolidation within the defence industry.

Mr Ronald also played down the prospects of BAE relocating its domicile and main stock market listing to the US, despite the fact that the UK government in the shape of the defence procurement minister Lord Drayson appears to support the idea.

In an interview with The Independent, Mr Ronald indicated BAE was not actively pursuing any mega-merger in the US despite having stated in the past this was its goal and courting both Boeing and General Dynamics. "Personally, I don't think anything will happen in the next three years," he said.

Mr Ronald, who retires at the end of the year, did not rule out a deal in the future and even said that a merger with Boeing remained a possibility despite BAE having just quit the civil aircraft market by selling its 20 per cent stake in Airbus.

"It wouldn't shock me if at some point we decided to re-enter the commercial market. Could we merge with Boeing or EADS [the parent company of Airbus]? Personally I wouldn't rule that out, but not in the foreseeable future."

Referring to the prospect of BAE shifting its headquarters to the US, Mr Ronald said: "Maybe if we ended up with 80 per cent of our business in the States, it would become a possibility, but I don't see that happening in the short term. It would require us to do a fair number of other acquisitions or one very large deal." At present, the US accounts for 40 per cent of BAE's £14.8bn turnover and just over half its 86,000 staff.

Mr Ronald said that BAE would like to expand in the US by buying more "platform" businesses and that it would like to acquire a helicopter company and a manufacturer of airborne radar.

"We would like to have more platform presence in the US in the same way as we do in the UK," he said, "but that requires these businesses to be available. It would be nice to own a helicopter maker, but there are only three in the US and none of them is for sale."

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