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Airbus | BAE | Mergers & Acquisitions

BAE Exercising Its ‘Put Option’ Re: Airbus

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In April 2006, DID covered and analyzed BAE Systems’ proposed sale of its 20% stake in Airbus. BAE now confirms that it has issued a Put Option Intention Notice to EADS, a process contemplated in the Airbus Shareholders Agreement signed in 2001. Wikipedia explains what a European Put Option is. The Put Option process is now almost complete, and will leave BAE Systems with over EUR 1.5 billion in funds to be used for acquisitions et. al. Following management’s damning assessment of Airbus, and recent news re: the A380 that seemed to confirm those fears, BAE’s shareholders overwhelmingly approved the sale. A chronology of updates follows… May 2/06: Option announced. BAE Systems may now exercise its put option, though it is not obliged to. Negotiations on BAE’s sale of its Airbus stake will now be governed by the guidelines within the Airbus Shareholders Agreement. See EADS release). June 7/06: BAE Exercises its Put Option. June 30/06: Rothschild Investment Bank sets the valuation of BAE’s 20% share at EUR 2.75 billion (USD $3.5 billion at current conversion), significantly less than the GBP 3.5-4.0 billion (EUR 5.0-5.75 billion) figures bandied about by analysts when BAE announced its sale, or even the reported […]

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