Boeing could engineer many ways to spoil Europe's $45-billion (U.S.) defence deal. The merger of BAE Systems with EADS requires U.S. security clearance and perhaps a nod from Congress. Boeing wields enormous clout in Washington and has a history of using it against rivals. What's more, valuations and looming military cuts mean its own bid for all or part of BAE can't be ruled out.
The regulatory hurdles are real but surmountable. The biggest is the Committee on Foreign Investment in the United States, an interagency watchdog that probes national security issues raised by deals with foreigners.
BAE, in fact, has won approval for past acquisitions, and its presence in 38 states, along with the modest operations EADS already has in the country, should help with this deal. Reviews by the U.S. Departments of State and Defense at this stage also would appear to have a smooth path.
Nevertheless, BAE handles highly classified tasks like creating warfare systems for U.S. fighter jets. The risks of sharing military secrets with EADS, owned in part by the French government, could give some officials pause.
U.S. politicians, especially with a big election coming up, will fear the deal's impact on their constituents. Mergers often lead to layoffs. With some 36,000 U.S. workers, BAE will face tough questions about its employment plans.
If it's so inclined, Boeing has the clout to make trouble on all these fronts. Its formidable general counsel, former federal judge Michael Luttig, leads one of America's most skilled and well-connected legal departments. For example, Boeing famously outmanoeuvred EADS last year for a $25-billion military tanker contract. It has one of the biggest lobbying budgets in Washington.
Beyond that, Boeing has the capability to advance on BAE itself. Some $550-billion of planned U.S. defence spending over a decade is set to be automatically axed absent a broad debt-reduction deal, making it a potentially good time to diversify. With a market value of $53-billion, the Dreamliner maker is far larger than either the British group or EADS, and trades at a higher valuation multiple, theoretically giving it room to pay up for BAE. Of course, a Boeing bid would draw political fire of its own.