Giant Defense Merger

The sheer political nature of the merger of Germany’s DaimlerChrysler’s Aerospace division, dasa, Spain’s Construcciones Aeronauticas (casa) and France’s Aerospatiale Matra, has the European Commission (EC) against a wall in approving its ratification. Although conflicting interests exist between the three massive participating corporations, the EC fears that any refusal for the merger to proceed would have considerable political repercussions which could threaten the commission’s credibility.

Put simply, Germany, Spain and France have made it clear that they won’t take no for an answer.

The deal appears set for imminent approval, opening the way for a public share issue by end of July. The new group, to be known as the European Aeronautic Defense and Space Co. (eads), will be the third-largest aerospace entity in the world.

Eads is wasting no time extending its gamut militarily and in the civilian market. In April, even prior to the commission approving the eads merger, the group signed an agreement with the Italian enterprise Finnmeccanica. This deal will create a joint venture company in the field of military and civil aircraft manufacture.

The new European aerospace consortium is on track to take full advantage of the new developing security and defense policy of the European Union. Speaking of this current EU initiative, Javier Solana, the EU foreign policy chief, stated in a recent interview, “In EU terms, it is moving at the speed of light.” He pointed out that EU leaders had only launched their security and defense policy less than six months ago, yet the requisite interim bodies for its administration are already set up.

Solana mentioned that the EU is now forging ahead with discussions on its future defense and security relationship with nato and with Third World countries (European Voice, May 4-10).