Is BAE now poised for takeover?

Following the dramatic collapse of BAE Systems’ proposed merger with EADS earlier this week, speculation has been rife that the British firm could be poised for a takeover bid from a number of rivals.

The £28 billion merger deal fell apart earlier this week amid claims that Germany would not consent to limiting their influence in the newly formed organisation.

The failure of the deal has left analysts to speculate on the company’s vulnerability, as many had predicted that BAE in particular were hoping for a swift resolution to the merger talks in order to remain financially stable in a shrinking defence market.

BAE Chief Executive Ian King and Chairman Dick Olver have found themselves under mounting pressure to resign in the wake of the merger decision. However, Mr King was keen to assure the public and shareholders of BAE’s continued survival: “We do not think the flood gates will open. We haven’t damaged the business by pressing ahead.”

Many critics disagree, and the spotlight will be on BAE over the coming days and weeks over the future of the organisation.

Should the company crumble under the pressure of takeover, the concern for the UK government will be in job security. Long a sticking point of Defence Secretary Phil Hammond in the initial negotiations, the collapse of the deal has left UK jobs in real jeopardy.

Hope remains that the company can resist takeover, and news of proposed deals going ahead despite the merger collapse this week will certainly put some minds at ease.

The story is sure to develop into next week, and updates will be available in next week’s DCI blog.


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