Briefing: BAE Systems / EADS combination contrasts with division of US primes

The proposed merger of European defence giants BAE Systems and EADS is the most dramatic in a series of corporate decisions that have shifted the defence industrial landscape in the past two years.

The move also underscores the different approaches to defence market austerity on the two sides of the Atlantic and, arguably, the differing drivers of the commercial aerospace and military markets.

While BAE Systems and EADS have potentially elected to face the challenges as a greatly enlarged entity combining extensive civilian and defence and security interests, a series of upper-tier contractors in the US have looked to divide their recovering commercial units from value-dampening military interests.

Since 2010, ITT Corporation has split into three separate businesses, Science Applications International Corporation (SAIC) has split in two, Northrop Grumman has cleaved off its naval shipbuilding unit, L-3 Communications spun-out the bulk of its government services interests and both Lockheed Martin and BAE Systems shed a series of non-core US assets.

Northrop Grumman finally ended its 12-year association with shipbuilding in April last year through the spin-off of its Huntington Ingalles Industries subsidiary.