BAe stops courting German partner

Immediate prospects of a merger between British Aerospace and DaimlerChrysler Aerospace (Dasa) receded last week after BAe said it could live without the Germans. Dasa and BAe were in talks late last year, which BAe interrupted to buy GEC’s Marconi defence division in a £7.4bn deal. BAe chief executive John Weston said there remained `a […]

Immediate prospects of a merger between British Aerospace and DaimlerChrysler Aerospace (Dasa) receded last week after BAe said it could live without the Germans.

Dasa and BAe were in talks late last year, which BAe interrupted to buy GEC’s Marconi defence division in a £7.4bn deal.

BAe chief executive John Weston said there remained `a good bit of logic’ in putting Dasa together with BAe and Marconi. But he said there were no active discussions going on at the moment.

`The ball is obviously in DaimlerChrysler’s court,’ he added.

BAe will have its hands full integrating Marconi. Even if it gets a clear run through the regulatory process, that is unlikely to be legally completed until the autumn.

Weston said the pressure to merge had also died down since the deal with GEC which, taken along with the French tie-up of Aerospatiale and Matra, meant there was enough cooperation going on through a network of joint ventures in the defence industry.

This satisfied many of the factors behind the idea of a single European aerospace and defence company, which was encouraged last year by European governments as the best response to competition from US defence players like Boeing and Lockheed Martin.

Weston said the idea of a single European defence company was not to create a monopoly but to bring about more consolidation in Europe. `The merger with Marconi is a huge leap in the right direction in terms of scale,’ he added.

* BAe denied a report last week that it was going to replace its Hawk jet trainer with a new version of Sweden’s Grippen aircraft, which is produced by Saab but marketed by BAe.