EADS and BAE Systems are two European Aerospace titans which tried and failed to overcome national politics to build a joint future. They insisted after their proposed merger collapsed, that the marriage was conceived with industrial logic and destined to give birth to a formidable civil and military group.
The two firms now face a different future in the global aerospace industry where the main competitors today are in the United States and tomorrow possibly also in emerging countries such as China and Brazil.
EADS, based in Germany and France, does most of its business in the civil aviation sector which is expected to generate huge demand for airliners for decades.
BAE Systems of Britain specialises in defence equipment, a sector as vital to national security as it is clouded by pressures on national budgets.
Both companies are important as hubs of technological and industrial excellence, and employment, in economies suffering from a perception of industrial decline. And both are important to their national economies as big exporters.
EADS was worth 23.15 billion euros ($29.80 billion) before the announcement on September 12 that EADS and BAE Systems wanted to tie up.
BAE Systems was worth 11.81 billion pounds (14.7 billion euros, $18.92 billion). This gave a joint capitalisation of 37.85 billion euros at that time.
The two companies said that a merged entity would have been worth about $45 billion (35 billion euros).
EADS
A central feature of the structure of the European Aeronautic Defence and Space Company (EADS) is that Germany and France have equal voting rights, each accounting for 22.35 percent of the total.
The French state owns about 15.0 percent and Lagardere about 7.5 percent, but Lagardere provides all the French directors for voting on behalf of this French holding.
The German industrial group Daimler owns 14.85 percent, having transferred an interest of 7.5 percent to a group of core investors including the KfW state bank, making a total of 22.35 percent, but Daimler votes on the board for the whole of this holding. Spain owns 5.45 percent of EADS. The rest of the company is in private hands via the stock market. EADS had emerged from a restructuring and merger of French, German and Spanish aerospace firms in 2000.
The deeper origins of its main business Airbus lay in a complex government structure which took account of French and German national interests.
Six years ago EADS ran into serious financial problems arising from delays to its programme for building the A380 superjumbo jet. These delays revealed deep flaws in management and industrial procedures and the group launched a vast programme to cut costs, to restructure and to diversify its cost base away from dependence on the euro since most aerospace sales are made in dollars.
EADS main competitor is Boeing of the United States.
EADS recently took a big step on Boeing's home ground, saying it would open an assembly plant costing $600 million in Alabama which will produce the first US-built Airbus aircraft by 2016. The initiative came after Airbus lost a big US Air Force contract for military refuelling tanker aircraft. The contract was awarded to Boeing after a politically charged contest.
BAE SYSTEMS
BAE Systems, based in London, is an independent quoted company. The biggest single shareholder is the Invesco Perpetual fund with 13.3 percent. The British government has a golden share which can prevent any foreigner from holding more than 15 percent of the voting rights.
BAE Systems achieves about 45 percent of its sales in the US market. The group is involved in building missile systems, tanks, torpedoes, submarines and fighter aircraft, and provides equipment for security. Until 2006, BAE Systems owned 20 percent of Airbus but withdrew to focus on the US market and against a background of long-standing unease at the structure for governance and political influence.
BAE Systems was born in 1999 when British Aerospace bought the British General Electric company.