Says Valuation Will Aid Board In Proposed Buyout Vote

In a move possibly aimed at increasing the value in its current stake in European Aeronautic Defense and Space Co, last week BAE Systems told Airbus it plans to audit the trouble European aerospace consortium before its shareholders vote on whether to accept a buyout of its 20 percent stake in EADS.

As Aero-News reported last week, an independent firm valued BAE's stake in EADS at $3.5 billion -- at least $1.5 billion under what BAE had stated its share in the company was worth.

The firm N.M. Rothschild & Sons Ltd was commisioned by EADS and BAE after negotiations between the two parties over a selling price fell through. The lower valuation is due in large part to the drop in EADS stock, following the June announcement of another delay in production of its upcoming A380 superjumbo.

An audit of Airbus' value may result in shareholders voting to reject the valuation -- which was approved by EADS -- should it reveal Airbus is worth more than many believe.

Despite its desire to sell of its share in EADS to obtain funds to invest in defense contractors, BAE Systems does have the option of holding onto its shares, in hopes of a better deal down the road.

FMI: www.baesystems.com, www.eads.com