DGAP-Adhoc: European Aeronautic Defence and Space Company EADS N.V.: Termination of talks regarding the possible merger of BAE Systems and EADS

| Source: EQS Group AG
European Aeronautic Defence and Space Company EADS N.V.  / Key word(s): Mergers
& Acquisitions 

10.10.2012 14:13

Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted
by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.


Ad-hoc release, 10 October 2012


BAE Systems plc and EADS N.V. 

Termination of talks regarding the possible merger of BAE Systems and EADS

Following the announcements made by BAE Systems plc ('BAE Systems') and
EADS N.V. ('EADS') on 12 September 2012 in relation to a possible
combination of their businesses through a dual listed company structure,
BAE Systems and EADS announce that they have decided to terminate their

BAE Systems and EADS believe that the merger was based on a sound
industrial logic and represented an opportunity to create a combination
from two strong and successful companies greater than the sum of the parts.
The merger would have produced a combined business that would have been a
greater force for competition and growth across both the commercial
aerospace and defence sectors and which would have delivered tangible
benefits to all stakeholders. Discussions with the relevant governments had
not reached a point where both companies could fully disclose the benefits
and detailed business case for this merger. BAE Systems and EADS are,
however, confident that these would have provided a strong case to take to
their shareholders.

As between themselves, BAE Systems and EADS had agreed the principal terms
of the merger, subject to the approval of their respective Boards,

  - The commercial terms of the merger;

  - The legal structure of the merger;

  - Governance arrangements which would enable the combined business to
    operate in a normal commercial manner;

  - A unified management and Board structure;

  - The strategy for the combined business;

  - Near-term dividend policy;

  - The cost saving and revenue benefits of the combination and associated
    implementation plan.

From the outset of discussions between the parties, both BAE Systems and
EADS were clear that they would proceed with a merger of their businesses
only if a transaction structure could be created that aligned the interests
of the parties' stakeholders and received their strong support. BAE Systems
and EADS worked constructively to deliver such a structure.

Notwithstanding a great deal of constructive and professional engagement
with the respective governments over recent weeks, it has become clear that
the interests of the parties' government stakeholders cannot be adequately
reconciled with each other or with the objectives that BAE Systems and EADS
established for the merger. BAE Systems and EADS have therefore decided it
is in the best interests of their companies and shareholders to terminate
the discussions to focus on delivering their respective strategies.

Ian King, Chief Executive of BAE Systems, today said: 

'We are obviously disappointed that we were unable to reach an acceptable
agreement with our various government stakeholders.  We believe the merger
presented a unique opportunity for BAE Systems and EADS to combine two
world class and complementary businesses to create a world leading
aerospace, defence and security group.

However, our business remains strong and financially robust. We continue to
see opportunities across our platforms and services offerings and in the
various international markets in which we operate.  We remain committed to
delivering total shareholder value, including a progressive dividend
policy, and look to the future with confidence.'

Tom Enders, Chief Executive of EADS, today said:

'I'd like to thank everybody who supported us, in particular all the
colleagues at BAE Systems and EADS for all their hard work and dedication
to this project in recent months. A special thank-you goes to Ian King for
his trust and partnership. It is, of course, a pity we didn't succeed but
I'm glad we tried. I'm sure there will be other challenges we'll tackle
together in the future. EADS will continue on its international growth path
and our shareholders can continue to expect profitable growth, excellent
liquidity and programme execution based on a strong order book.'


BAE Systems

For Investors:

Andrew Wrathall, Head of Investor Relations Tel: +44 (0) 1252 383 455

For Media:

Charlotte Lambkin, Group Communications Director Tel: +44 (0) 78 0171 7739

John Suttle, Senior Vice President, Communications Tel: +1 (703) 344 8508


For Media:

Rainer Ohler, Head of Group Communications Tel: +33 (0)5 81 91 81 38

Martin Agüera, Interim Head of Media Relations Tel: +49 (0)89 607 34735

Matthieu Duvelleroy, Media Relations France Tel: +33 (0)1 42 24 24 25

For Investors and Analysts:

Philippe Balducchi, Head of Investor Relations Tel: +33 (0) 1 42 24 28 00
Julie Kitcher, Institutionals and Analysts  Tel: +33 (0) 1 42 24 26 36

This announcement, which is being made with EADS consent, is made in
accordance with Rule 2.8 of the City Code on Takeovers and Mergers (the
'Takeover Code').

A copy of this announcement will be made available on BAE Systems' website
at www.baesystems.com and EADS's website at www.eads.com.

This announcement does not constitute an offer for sale of any securities
or an offer or an invitation to purchase any securities in the United
States. Securities may not be offered or sold in the United States absent
registration under the US Securities Act of 1933, as amended (the
'Securities Act') or another exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. There will
be no public offering of securities in the United States. Holders of BAE
Systems securities or of EADS securities who are US persons or who are
located in the United States are urged to read any relevant documents
furnished or filed with the SEC because they contain important information.
Any such documents furnished or filed with the SEC, will be available free
of charge at the SEC's web site at www.sec.gov.

10.10.2012 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

Language:     English
Company:      European Aeronautic Defence and Space Company EADS N.V.
              P.O. Box 32008
              2303 DA Leiden
Phone:        00 800 00 02 2002
Fax:          +49 (0)89 607 - 26481
E-mail:       ir@eads.net
Internet:     www.eads.com
ISIN:         NL0000235190
WKN:          938914
Indices:      MDAX
Listed:       Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
              in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart
End of Announcement                             DGAP News-Service