[EADS North America’s senior VP for communications, Guy Hicks, circulated the following email this afternoon to explain EADS’s pending merger with BAE.]

As you all reported or have seen, today there was speculation in the media about a possible combination of EADS and BAE Systems. As a result, we issued an official statement, which you will find attached. It is important to us that you understand our plans for future growth. To that end, I would like to provide you with a more complete explanation of our activities.

We can indeed confirm that we are in discussions with BAE Systems about such a major strategic move. However, these discussions have not yet been concluded and their outcome remains uncertain at this juncture. In particular, the supervisory committees will still have to make their final decisions.

Nevertheless, we are convinced that a combination of EADS and BAE Systems is a unique opportunity for our company. Together we would create a world-class international aerospace, defense and security group. The combined company would be global in nature, with a very significant industrial presence in the United States – both through direct employment and manufacturing, as well as our extensive US supplier base.

EADS and BAE Systems are no strangers to each other, in fact we have been cooperating for decades in many fields, most notably in Airbus (until BAE Systems sold its share in 2006), in space, in missiles and military aircraft. The idea of a full merger dates back to the late 1990s but, for various reasons, has so far not been implemented. This time, however, the EADS and BAE Systems leadership teams are convinced that a combination of both, with largely complementary businesses, will position them much better for the future and its manifold challenges. The common history and the long-lasting cooperation between the two groups minimizes the execution risk of such a merger. For both, this is the preferred option for their future development and growth; and, most obviously, shareholders on both sides would largely benefit from this step.

For EADS, a merger with BAE Systems would fulfill our long-held strategic goals: to better balance our business portfolio through stronger defense and security activities; to build a stronger global industrial footprint, expand our presence in the US and create more value for our customers, employees and shareholders. EADS and BAE Systems can be successful in the future as we grow globally together.

Our intent with the combined group is to assure that the national security interests we serve are protected. We recognize this merged corporate enterprise will help provide critical security for several independent, but allied nation states. As such, the security interests of the individual as well as collective nation states will be protected. Particularly in the US, both companies already support classified and sensitive programs with the Department of Defense. This combination will not change or affect our responsibilities to this important customer.

Please kindly note that binding legal requirements for mergers and acquisitions give us only very limited scope to inform about the details of the intended business combination. We will obviously update you immediately when any further decision has been taken. If you have any questions in the meantime, my colleagues and I are at your disposal.

All the best,

Guy

Guy M. Hicks
Senior Vice President
Government Relations and Communications
EADS North America