Approximately $1.5 Billion Less Than Originally
ANN REALTIME UPDATE
09.06.06 1915 EDT: We had a feeling it would turn out this
way. Just hours after denying rumors the aerospace company planned
to sell its 20 percent stake in EADS, BAE Systems announced late
Wednesday its board will go ahead with the plan after all.
Bloomberg reports the deal, valued at $3.5 billion, is subject
to the approval of BAE's shareholders. That's $1.5 billion less
than BAE has originally estimated its stake in EADS to be worth...
but that was before this summer's turmoil at planemaker Airbus.
"The board believes that Airbus is facing a challenging short-
to medium- term outlook," BAE reported to the London Stock
Exchange. "The board therefore believes that is in the best
interests of the company to exit at the price determined by the
Officials at Britain's BAE Systems discounted rumors the company
was preparing to dump its 20 percent stake in EADS at a price far
lower than the company originally wanted.
The Independent newspaper reported Sunday BAE planned to
green-light the sale at a board meeting this week -- a report BAE
Systems called premature, adding any decisions on a sale would be
made by shareholders, not the board.
As Aero-News reported, in
July third-party auditing firm N.M. Rothschild & Sons Ltd
valued BAE's stake in the European aerospace consortium at $3.5
billion -- $1.5 billion less than BAE had estimated its shares were
worth. The discrepancy was due, in large part, to troubles at
planemaker Airbus this year.
In hopes of securing a
better deal, BAE then called for an audit of Airbus... hoping that
valuation would bump up the price. That audit was to be completed
before the end of August... but its results have not been made
The British aerospace manufacturer hoped to sell off its shares
in EADS to raise capital for investment in defense contract
companies... especially those in North America. BAE Systems does
have the option of holding onto its shares, in hopes of a better
price down the road.