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Home | Update | Latest Issue | Gallery | FR Profile | Datafiles | FR 2/97 BOEING AND MCDONNELL DOUGLAS FORM NEW GIANT by Norbert Burgner Boeing and McDonnell Douglas are fusioning. Unless antitrust regulations call a halt to it, the merger will form the world's largest aerospace concern in mid 1997. With more than 200000 employees and a prognosted turnover of 48 billion dollars for the next business year, the new concern, called "The Boeing Company", will even leave mega-mergers such as Lockheed Martin notably behind. The annexation of McDonnell Douglas - that's what the merger really is - came only a few weeks after Boeing had taken over Rockwell International's defence and aerospace divisions for $3,1 billion. According to the agreement of the newest transaction, the McDonnell Douglas stockholders will receive 0,65 Boeing stocks for each of their shares. Based on the closing rates of the New York stock market from December 13, 1996, showing 96 _ US dollars for each Boeing stock, this agreement results in a business volume of $13,3 billion. Following the announcement of the planned fusioning, the Boeing stock price went up by 7,4 percent and the McDonnell Douglas rate jumped up (by 10 3/8 dollar) to a quotation of 62 3/8 dollar. The headquarters of the new company will remain in Seattle and the former McDonnell headquarters in St. Louis, Missouri, as well as, the civil Douglas Aircraft site in Long Beach and the Rockwell headquarters in Seal Beach, California, will be maintained as the priority locations. All together, the new aerospace concern will be represented in 27 US states. "This merger joins two companies with capabilities that blend together very well. Together we will manifest our position as the world's leading aerospace concern", said Boeing head Phil Condit who will lead the new concern as Chairman and Chief Executive Officer. In agreement with him, Harry Stonecipher, so far President/CEO of McDonnell Douglas and designated Chief Operation Officer of the "new" Boeing Company, stated: "The transaction joins two diversified companies with extraordinary potential on almost all business fields of the aerospace branch. Together we are in the position to offer competitive products, now and in the years to come." However, Condit not only sees growth. According to him, the integration of the two companies is generating a potential for savings of up to one billion dollars. With this in mind, the deal came at the right time for McDonnell Douglas. The once second largest aircraft manufacturer in the world has gotten increasingly into economical turbulences in the past years. While the military business with the successful F-15 and F-18 fighters, as well as, the AH-64 Apache and RAH-66 Comanche attack helicopters did well, the civil aircraft business has been in a free fall since the introduction of the luckless MD-11. Neither the new MD-90 nor the projected MD-95 could change this situation. Market shares were continuously lost to Boeing and Airbus and having only five percent of the market, the Douglas Aircraft company, the civil part of the concern, was facing a dead line anyway. Harry Stonecipher, who had joined the company in 1993 as the great hope for a successful future, has to put up with the reproach of not having been able to turn the ship around. When in mid November of last year the preliminary decision for the new Joint Strike Fighter was made in favor of Boeing and Lockheed Martin, McDonnell Douglas' fate was practically sealed and the merger only a question of time. Furthermore, this fusioning is not just the accomplishment of the obvious. The uncompromising persistence with which the US industry and government are pushing the consolidation process, must be recognized by the rest of the aerospace branch, and mainly in Europe, as a warning but also as motivation to increase their own efficiency. From page 20 of FLUG REVUE 2/97 Home | Update | Latest Issue | Gallery | FR Profile | Datafiles | FR 2/97 Copyright 1997 by Motor-Presse Stuttgart. All rights reserved. Last updated January 10, 1997