Reports & Analysis: BAE in Talks to Sell Its 20% Stake in EADS Airbus

Both BAE Systems and EADS have confirmed that BAE has initiated a discussion on the potential disposal of BAE Systems’ 20% stake in Airbus.” Negotiations were described as being in “the very early stages”; BAE’s 20% holding is valued at EUR 3.5 billion ($4.3 billion) in EADS’s books, but The Scotsman newspaper noted that analysts expect any sale to be worth GBP 3.0-4.5 billion ($5.2-7.8 billion at current conversion). EADS adds that the initiation of these discussions does not represent an exercise of the put option held by BAE Systems in relation to this stake. More details regarding the potential deal, its military procurement significance, and some analysis regarding both its strategic implications and BAE’s future options can be found below… along with updates as the deal progresses. The Deal: Background Basics A330/KC-30 Concept(click to view full) BAE’s association with Airbus stretches back 37 years, and BAE is selling its last commercial-aerospace holdings after a record year of plane orders for Airbus and chief competitor Boeing Co. Indeed, as DID’s coverage of BAE’s FY 2005 year-end report notes, civil aircraft were the company’s second-biggest revenue, cash and earnings contributor. Airbus contributed GBP 273 million in underlying earnings in 2005, nearly […]