EADS, BAE abandon plan for largest aerospace firm

LOS ANGELES (MCT) — One month after announcing they were in blockbuster merger talks, Airbus parent European Aeronautic Defence & Space Co. and BAE Systems PLC decided to terminate their discussions due to a political impasse.

The combination of the two European aerospace/defense giants would have created the largest such company in the world.

Together, British-owned BAE and EADS, owned in part by the French, German and Spanish governments, would have annual sales totaling more than $94 billion, dwarfing current industry leader Boeing Co.'s $68.7 billion.

But in a joint statement, the companies said: "It has become clear that the interests of the parties' government stakeholders cannot be adequately reconciled with each other or with the objectives that BAE Systems and EADS established for the merger."

The potential merger would have had broad effects across the defense industry, particularly for larger contractors such as Lockheed Martin Corp., Northrop Grumman Corp. and Boeing.

BAE and EADS also have divisions in the United States and frequently compete for U.S. defense work. Both firms have suppliers and facilities in Southern California.

Analysts had said that the deal made the most sense on the defense side of business, now that global defense revenues are on the decline.

— Los Angeles Times