Merging or dying

This article is about surviving in aerospace industry. Merging or dying? It is important to decide we keep walking alone or get a company. Merging is one of a way to be better or survive. We could say merging company is a takeover. However, it is planned and has a better future.

Aerospace is one of many biggest industry and also really difficult to survive. On the other side, it also is a stop for being losing behind and closer to bankruptcy. By merging to create the largest aerospace company, European Aeronautic, Defence & Space Co. (EAD) and BAE Systems Plc (BA) they want to challenge Boeing Co. (BA).

Merging with EADS would shield BAE’s revenue from defense spending cuts in the U.S. after the nation ended its war in Iraq and the war in Afghanistan winds down, S&P Capital’s mode. On the other hand, EADS is probably looking to take advantage of BAE’s low valuation and even out its exposure to the military and commercial markets

They are trying to improve the industry’s worst operating margin and a near record-low valuation. Growing firm also means merging to be better. The new company would have some positive point for investor and stronger in their own industry.  Their goals are

- Their annual sales could be almost $100 billion.

- Mix of sales from civil and defense operations, as well as a more global reach spanning Europe, the U.S. and Asia.

EAD and BA are going to be one solid and strong company because they are able to see positive features from both sides.

- Low valuation and even out the exposure to the military and commercial markets from BA.

- EADS would shield BAE’s revenue from defense spending cuts in the U.S. after the nation ended its war in Iraq and the war in Afghanistan winds down.

- Buying BAE would also help EADS reduce its vulnerability to swings in the commercial-aircraft cycle.

A new combination will be more competitive with Boing by creating benefits including cost savings and new business opportunities

Reference: http://www.bloomberg.com/news/2012-09-14/eads-bae-doubles-down-on-missed-confidence-real-m-a.html