It is natural to regard any merger proposed by BAE Systems, the UK’s biggest defence company, with suspicion. Had it a better record of predicting its industry’s future and doing deals at the right price, it would be in less of a pickle.
So BAE’s latest brainwave – to be taken over by EADS, the Franco-German owner of Airbus, at a tricky time in the defence industry – sounds awfully typical. The company that sold a 20 per cent stake in Airbus when the latter had problems with the A380 aircraft, and ploughed the money into US defence before being hit by Pentagon cuts, is once again dealmaking in haste.
Many British members of parliament would like BAE to carry on flying the flag – or combine forces with Rolls-Royce, the UK aerospace company – rather than choose a European solution. Some investors would prefer it to plough on in defence, paying a big dividend to reward their loyalty.