British Aerospace Gets OK on Marconi Deal

British Aerospace said it expects to complete its $10-billion purchase of Marconi Electronic Systems from Britain’s General Electric Co. next Monday after winning regulatory clearance from the U.S. Defense Department. The deal would create the world’s second-biggest defense company after Lockheed Martin Corp.--with products such as the Eurofighter, Tornado, Harrier and Gripen warplanes and missiles systems such as the Storm Shadow and Mistral--and form a 20% stake in Airbus Industrie. The combined company would rival Raytheon Co. as the world’s third-largest aerospace and defense company, after No. 1 Boeing Co. and No. 2 Lockheed. British Aerospace had won approval from British antitrust authorities, though both the U.S. and Britain have asked it to set up firewalls in certain cases to ensure that competition between British Aerospace and Marconi remains. The Defense Department noted in particular work on the U.S. Air Force and Navy Joint Strike Fighter program and on the U.S. Army Tracer scout vehicle program. The transaction is worth $10 billion based on Monday’s closing share price, about 20% less than when the deal was announced Jan. 19. British Aerospace is paying GEC shareholders 0.42 share of the new firm for each GEC share they own. British Aerospace shares fell 50 cents to close at $5.50 in over-the-counter trading.