Pentagon needs more details to evaluate BAE-EADS merger: Donley

WASHINGTON Mon Sep 17, 2012 4:33pm EDT

WASHINGTON (Reuters) - The U.S. Defense Department needs more details to be able to assess the security implications of a possible merger of BAE Systems (BAES.L) and EADS EAD.PA, U.S. Air Force Secretary Michael Donley said on Monday.

Donley said the U.S. government had successfully concluded special security agreements with foreign-owned companies in the past that allowed them to work on sensitive military and intelligence contracts, but each of those deals was "very individual and very specific."

Both BAE and EADS have such agreements in force currently, but a merger would require negotiation and approval by the U.S. government. Sources close to the companies have said that they do not expect the U.S. government to block a deal on security or antitrust grounds.

"I don't think we know the BAE-EADS final configuration," Donley told reporters at the annual meeting of the Air Force Association, a booster group that includes current and retired service members and industry executives.

"We just have to wait until they're done, until the Department of Defense can assess what the conditions (or) the governance for such a merger would be," Donley said, adding that he had already been in touch with Pentagon acquisition chief Frank Kendall about the issue.

Air Force Major General Christopher Bogdan told reporters at the conference that he did not anticipate major concerns about the impact of a BAE-EADS merger on the F-35 Joint Strike Fighter program.

Lockheed Martin Corp (LMT.N) is the prime contractor on the program, but Northrop Grumman Corp (NOC.N) and BAE Systems are key suppliers.

"I just sense that it would be a low threat to us," Bogdan said. "From what I have seen from what the (subcontractors) do on the program, I'm ... not all that concerned," Bogdan said.

(Reporting By Andrea Shalal-Esa; Editing by Tim Dobbyn)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.