Analysis: BAE-EADS Merger Collapse Shifts Focus To Smaller Deals
By Andrea Shalal-Esa and Soyoung Kim/Reuters
Any combination with General Dynamics Corp could raise antitrust issues, since the General Dynamics and BAE both build the biggest U.S. combat vehicles, and on a global scale, submarines.
General Dynamics also is changing management, with Phebe Novakovic slated to take over as chief executive in January. The company has highlighted the importance of its balanced portfolio of commercial and military businesses, and may be reluctant to add more defense activities to its portfolio at a time when military spending is declining, analysts said.
Pentagon officials were open to a possible merger of BAE and EADS because it would have created a stronger, sixth prime competitor. But the agency could be more wary of a deal that involved a combination with one of the existing primes, some industry executives said.