Merger Talks Terminated for BAE Systems and EADS

Following the announcements made by BAE Systems and EADS on September, 12 2012 in relation to a possible combination of their businesses through a dual listed company structure, BAE Systems and EADS announce that they have decided to terminate their discussions.

BAE Systems and EADS believe that the merger was based on a sound industrial logic and represented an opportunity to create a combination from two strong and successful companies greater than the sum of the parts. The merger would have produced a combined business that would have been a greater force for competition and growth across both the commercial aerospace and defense sectors and which would have delivered tangible benefits to all stakeholders. Discussions with the relevant governments had not reached a point where both companies could fully disclose the benefits and detailed business case for this merger. BAE Systems and EADS say they are confident that these would have provided a strong case to take to their shareholders.

As between themselves, BAE Systems and EADS had agreed the principal terms of the merger, subject to the approval of their respective Boards.

From the outset of discussions between the parties, both BAE Systems and EADS say they were clear that they would proceed with a merger of their businesses only if a transaction structure could be created that aligned the interests of the parties’ stakeholders and received their strong support.

“We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders,” said Ian King, Chief Executive of BAE Systems. “We believe the merger presented a unique opportunity for BAE Systems and EADS to combine two world class and complementary businesses to create a world leading aerospace, defense and security group. However, our business remains strong and financially robust. We continue to see opportunities across our platforms and services offerings and in the various international markets in which we operate. We remain committed to delivering total shareholder value, including a progressive dividend policy, and look to the future with confidence.”

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