Pentagon Needs More Details to Evaluate BAE-EADS Merger: Donley

September 17, 2012

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.

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