* Boeing: review must address security, industrial questions
* US deputy defense sec: each case reviewed individually
By Andrea Shalal-Esa
WASHINGTON, Sept 19 A merger of Europe's EADS
and Britain's BAE Systems Plc would raise
national security and industrial questions and should be
reviewed carefully by government regulators, the head of Boeing
Co's defense operations said on Wednesday.
"We would expect that to be subjected to all the normal
regulatory scrutiny," Dennis Muilenburg told Reuters at the
annual Air Force Association conference. "There are ... national
security questions, industrial questions, and those will have to
be dealt with."
"This is a serious matter that needs to be scrutinized,"
Muilenburg said, adding that it was difficult to comment further
until the two companies released details of the proposed
structure of the combined company.
EADS and BAE said last week they were in advanced talks
about a possible $48 billion merger, which would create a global
aerospace and defense giant.
Boeing Chief Executive Jim McNerney last week said his
company was not threatened by the discussions, but the talks
reflected the start of global consolidation in the defense
industry. At the time, he declined to comment further, saying he
had not studied the issue.
Deputy Defense Secretary Ashton Carter told the conference
earlier on Wednesday that the Pentagon had been told informally
about the possible merger, but would wait to carry out a formal
review until it received a proposal from the companies.
He said the department's industrial policy was aimed at
allowing companies to make individual business decisions about
mergers that allowed them to be financially successful, with
each proposed merger to be reviewed on a case-by-case basis,
taking competition and security factors into consideration.
"We understand that our industry needs to be technologically
successful. It needs to be dynamic. It has to be financially
successful because it has to exist in the capital markets,"
"What is economically sensible for them is going to deliver
good value and productivity growth for the department," Carter
said, adding that the BAE-EADS deal was just one of many
transactions under consideration by the industry.
U.S. companies are evaluating whether the possible merger
would affect their close ties with BAE, which is a key supplier
for many other companies in both the commercial and defense
sectors. EADS also has partnerships with many U.S. companies.