Tim Ripley

As merger mania sweeps Farnborough '98, the fate of global industry consolidation plans look likely to be brokered on a golf course in the USA later this week.

Chief executives for all the main global aerospace players are scheduled to leave Farnborough on Wednesday to fly to the annual Conquistadors meeting.

British Aerospace chairman Sir Dick Evans left for the USA last week and his managing director, John Weston, is soon to follow across the Atlantic.

Raytheon's senior leadership are staying in the US to prepare for the meeting and Lockheed Martin's Vance Coffman is also leaving Farnborough early to attend.

Gathering

The regular gathering usually takes place after Farnborough, but this year's meeting has been brought forward to allow the chief executives to escape the 'hot house' atmosphere of the airshow.

"On the seclusion of the golf course they can talk candidly," says one source.

Rumours abound at Farnborough of future consolidations and mergers on both side of the Atlantic. Pressure continues for European consolidation and the Americans are still dealing with the fallout from the blocking of the Lockheed Martin-Northrop Grumman merger.

The 'hottest' rumour is of a merger between BAe and Daimler-Benz Aerospace (DASA), which looks likely to be announced in late September after the German group's board approves its takeover of US car manufacturer Chrysler.

BAe's Weston dropped a heavy hint at Farnborough on Monday, when he said steady progress was being made in Europe. "You will see things happen shortly."

The Daimler-Benz board is reportedly due to meet next week to confirm the deal which would create the first pillar of a European super aerospace and defence company.

The Anglo-German link-up would come in the wake of BAe's recent purchase of 35% stake in Sweden's Saab and is seen as a move to increase pressure on the French to speed up the privatisation of their aerospace industry.

Major issues

DASA and BAe spokesmen decline to comment. A DASA spokesman says that his company is "-ready to merge with partners in the UK and France in a European aerospace company. All European partners are talking about major issues. European industry has to come together."

"The clock is ticking and we will be merged with a major European company within a year," a senior BAe executive recently declared. Other BAe executives jokingly talk about being ordered to take German lessons.

BAe would have a 51% stake in the new company, which would concentrate on military business. On 1997 figures, the merged company would have a £13.75 billion ($22 billion) annual turnover, including £7.5 billion ($12 billion) from defence work.

If the merger gets the go-ahead it is expected to involve a re-arrangement of BAe and DASA's stakes in the Airbus Industrie partnership. A number of their existing European joint venture agreements with French companies in space, missiles and helicopters sectors would also be affected by the merger.

Source: Flight Daily News