Boeing-McDonnell Douglas Deal Gets OK
The merger of longtime rivals Boeing Co. and McDonnell Douglas Corp. on Friday won overwhelming shareholder approval, clearing the way for a combination that Boeing’s chairman said “will redefine the future of flight.”
The $15-billion merger blends McDonnell Douglas’ success in fighter aircraft, rocket boosters and other defense work with Boeing’s dominance of the commercial jet market.
Phil Condit, Boeing chairman, and his counterpart, McDonnell Douglas Chairman John McDonnell, noted that the companies’ founders--William Boeing, James S. McDonnell and Donald Douglas--witnessed the dawn of flight.
“My father was the first employee of McDonnell Aircraft Co., so it’s perhaps fitting that I will be the last to retire from McDonnell Douglas,” McDonnell told shareholders in St. Louis. He will step down just before the merger becomes final Aug. 1. The combined company, which will keep the Boeing name, begins operations the following Monday, Aug. 4.
“We are surrendering our independence to be part of something greater--a new company that has the potential to become the first and only preeminent aerospace company in the history of aviation,” he said.
McDonnell’s brother, board member James S. McDonnell III, was the only major opponent of the merger. He complained earlier about Boeing’s unwillingness to include McDonnell Douglas in the corporate name.
More than 99% of the votes from Boeing shareholders approved of the $15-billion transaction at a Seattle meeting. McDonnell Douglas shareholders met simultaneously in St. Louis, and 75.8% voted for the deal.
Shares of Boeing lost $1.13 to close at $58.88, and McDonnell Douglas shares fell $1.63 to $75.69. Both trade on the New York Stock Exchange.
The votes came after Boeing satisfied the deal’s most ardent critic--the European Union--with some last-minute concessions, including an offer to scrap exclusive supply contracts with U.S. airlines. The Europeans strongly opposed those deals, saying they shut out Airbus Industrie, the European consortium and Boeing’s only remaining commercial jet competitor.
The European Union’s Executive Commission gave tentative approval to the deal Wednesday, and its antitrust experts on Friday rubber-stamped the pact to set the stage for formal EU approval of the deal next week.
The EU had no power to block the merger but could have excluded the combined company from Europe, raising the specter of a trade war with the United States.
The U.S. Federal Trade Commission sanctioned the merger earlier this month without asking for any changes.
Executives say the next six months will bring a crush of decisions, including the future of McDonnell Douglas’ struggling commercial jetliner business.
Condit said some Douglas aircraft workers may be headed to Seattle from the commercial jet factory in Long Beach, and Boeing will look to avoid duplication in administrative and other areas. But few layoffs are expected, as Boeing is boosting jetliner production to record levels and both companies have been expanding defense and space work.
The new company will have about 223,000 employees in 27 states, primarily Washington, Missouri, California, Kansas, Pennsylvania and Alabama, with estimated revenue this year in excess of $48 billion.
