Alan Dron
A new 'British Empire' is on the horizon as two of the nation's largest defence and aerospace companies gear up for major expansions of their worldwide activities, says a report issued yesterday.
British Aerospace (BAe) and GEC are tipped by analysts of US publication Defence Mergers & Acquisitions to take their respective businesses to new heights. They have already been involved in 14 major deals since 1995.
The McLean, Virginia-based database and monthly report comments that, while the wave of mega-mergers in the USA has largely passed, "-activity in the rest of the world is still building.
"By virtue of geography, history and financial strength, British firms are poised to lead this process," says DM&A editor Stuart McCutchan.
He notes that BAe "-is the prohibitive favourite to acquire a stake in Spanish aircraft makers Casa, and is also bidding for Australia's ADI, South Africa's Denel and Poland's PZL-Mielec."
Through previous purchases, BAe is already the Australian market's second-largest player. Acquiring ADI would give it a stranglehold on Australia's defence industry, "-one of the world's most open defence markets and a stepping stone to the rest of Asia."
In Europe, says McCutchan, BAe has long wanted to increase its current 20% stake in Airbus Industrie. With Airbus moving toward privatisation, the British company could either simply buy more shares, or acquire them via existing stakeholders.
Taking the latter approach to its most spectacular conclusion a BAe / Daimler Benz Aerospace (Dasa) combination, with the British company taking a 51% stake, would give BAe effective control over Dasa's 37.9% interest in the Toulouse-based operation.
GEC, says DM&A, has even more spare cash available than BAe to increase its influence and makes no secret of its expansion plans.
Its chief executive George Simpson is on record as wanting to create a world-class defence electronics company in the USA, Europe and Asia.
It recently swallowed Tracor, the biggest-ever purchase of a US defence firm by a European competitor, and could have paid cash for Northrop Grumman, if it had felt that it could get the deal past US legislators. It has a joint venture with Italy's Alenia and, like BAe, is stalking Australia's ADI.
Despite the frequently-mooted possibility of a merger between BAe and GEC, however, DM&A's analysts rule out that option. Such a behemoth would dominate its domestic market to such an extent that the government would object to the loss of competition that would occur.
Source: Flight Daily News
