British Aerospace, GEC May Ally or Merge

British Aerospace and General Electric Co. of Britain are close to agreeing to a mega-alliance, the Sunday Times reported. Leaders of the two companies are believed to favor a full merger, which would create a $39-billion group, but they are also examining a deal that would inject the London-based GEC’s Marconi defense-electronics arm into an enlarged British Aerospace. The government, which has the power to block such a deal, is believed to be unhappy with the prospect of a merger that would leave DaimlerChrysler Aerospace, the aerospace wing of DaimlerChrysler of Germany known as Dasa, out in the cold, the paper said. Ministers instead reportedly favor a trilateral grouping of British Aerospace, Dasa and Marconi that would split the shareholdings among the three groups. Some observers doubt it will be possible to make room for all three in a single deal. After a week of intensive discussions, British Aerospace and GEC are believed to be ready to make a statement about a bilateral deal, the newspaper said but did not cite sources. GEC, one of Britain’s largest manufacturing conglomerates, is not affiliated with Fairfield, Conn.-based General Electric Co.