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EADS-BEA deal would put pressure on Canadian sector

Any agreement would be subject to approval by the companies’ boards and shareholders and then face regulatory scrutiny in Europe and possibly elsewhere


The proposed deal between EADS and BAE Systems signals the bulking up of global aerospace companies to cope with heightened uncertainty in both the commercial and military markets.

It may also put pressure on the Canadian aerospace business. Companies such as Montreal-based Bombardier Inc. – which is for the first time flying into Boeing and Airbus' airspace with its new C Series jet – will find themselves under growing pressure from ever bigger industry players.

Bombardier Inc. spokeswoman Haley Dunne said it would not be appropriate to comment at this time.

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"A consolidation is going on globally in our sector as a consequence of declining defence budgets in Europe and anticipated cuts in the United States," said Tim Page, chief executive of the Canadian Association of Defence and Security Industries.

But Mr. Page does not see an EADS-BAE merger having any major impact – at least right now – on Canadian defence companies, which supply a variety of parts and services to buyers around the world.

Earlier this year, Lockheed Martin CEO Bob Stevens said that under the threat of so-called sequestration, or automatic defence spending cuts in the U.S., large contractors might be forced to combine part or all of their businesses in order to stay in the black.

If successful, the merger would give Toulouse, France-based EADS the strong defence business that has eluded it for more than a decade.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More


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