A British parliamentary panel recently said it will review the possible merger between the European Aeronautic Defence and Space Co. (EADS) and Britain’s BAE Systems for the impact the combination would have on defense in the United Kingdom.
The U.K. Parliament Defence Committee, in announcing the inquiry, said the inquiry will examine the potential effects a merger would have on defense spending in Britain, the protection of key defense capabilities and technologies, including the relationship between BAE and the U.K. Ministry of Defense, and the impact it would have on the country’s defense industrial base, including jobs.
The potential “merger of two such large defence contractors would have a significant and strategic impact on their relationships with UK, US and European governments,” according to a statement by the Defence Committee. “It could also radically alter the defence industrial base in these countries.”
Earlier this month, EADS and BAE confirmed that they are in discussions about a potential merger, which would create the largest aerospace and defense company in the world with about $94 billion in annual sales. The merger proposal as explained by the two companies would give EADS shareholders a 60 percent stake in the merged entity.
The panel said it will take oral evidence related to its review in October and will also accept written statements through.
Under British law, EADS and BAE must state by Oct. 10 whether they have agreed to pursue a merger or not. The companies can also ask U.K. regulatory authorities for an extension of the deadline but EADS Chief Tom Enders recently told the German edition of the Wall Street Journal that they expect to be able to clear up any issues before the deadline and not seek an extension.