BAE Systems and EADS couldn’t get the terms they needed from European governments to move ahead with their proposed merger, so the deal is now dead. BAE Chief Executive Ian King said throughout the process that it was an opportunity rather than a necessity, which certainly rings true: companies that pay a dividend of nearly 6% don’t have their backs to the wall. King’s enterprise remains uniquely positioned in the global defense business, with a big footprint in all of the major markets. It is the only foreign-owned company in the history of the U.S. defense sector that has been able to bid as a prime contractor on the most sensitive projects. So Mr. King can take his time deciding what opportunities he wants BAE Systems to pursue next. Whatever path he chooses, he is likely to stick with the central organizing principle of his tenure: delivering superior results to shareholders. I have written a commentary for Forbes here.
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