30 November 1999: BAE Systems formed in £7.7bn merger

On this day in 1999 British Aerospace merged with Marconi Electronic Systems to form BAE Systems, one of the biggest arms manufacturers in the world.

When thinking of international business successes, it's unlikely that the name “Marconi” is in anyone's minds. After all, Marconi Plc, the telecoms company and successor to GEC, imploded spectacularly after the dotcom bubble, after a series of disastrous management decisions. But there was another Marconi – Marconi Electronic Systems – that had been spun off from GEC, and went on to form half of one of the world's biggest arms manufacturers (or defence companies, if you prefer).

The last years of the 20th century saw huge consolidation in the defence industry. Boeing and McDonnell Douglas merged, and Lockheed Martin was formed by the merger of Lockheed and Martin Marietta. Europe had designs on a consolidated defence company of its own, which eventually became EADS, then Airbus.

Britain was not to be left out. We had our own defence and aerospace companies in British Aerospace (BAe), which, as the name implied, built planes. Marconi built radar and other electronic systems for the space and naval sectors. BAe was considering a merger with Germany's Daimler Chrysler Aerospace. But when GEC put Marconi up for sale, BAe feared it would be acquired by a US company and pose a threat.

And so on this day in 1999, British Aerospace and Marconi Electronic Systems merged, in a £7.7bn deal, and BAE Systems was formed. It makes everything from fighter jets to tanks and warships, and is now Europe's biggest defence company, with sales in 2011 of some $21bn, says Forbes.

Among world arms companies it is the fifth biggest in terms of sales, after Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics. The bulk of its business comes from the US, where it owns several subsidiaries. The UK is its second-biggest market. A smaller but still very significant market is Saudi Arabia. Its highly controversial and politically sensitive £40bn Al Yamamah oil-for-arms deal was the focus of several corruption investigations, including by the Serious Fraud Office and the US government.

Recommended

Key dates for 2023: here are the dates you need to know when it comes to your money in 2023
Personal finance

Key dates for 2023: here are the dates you need to know when it comes to your money in 2023

There is no shortage of important dates to be aware of next year – which are likely to affect your financial health. We run through the key dates in 2…
6 Dec 2022
What is a recession and how will it affect you?
UK Economy

What is a recession and how will it affect you?

The UK economy is heading towards a recession, according to economists. But what is a recession, and what does it mean for your money?
6 Dec 2022
Investment scams are infiltrating Facebook and Instagram
Investment strategy

Investment scams are infiltrating Facebook and Instagram

Research from Which? found hundreds of investment ads on Facebook and Instagram that could be misleading investors into potential investment scams.
6 Dec 2022
Is it a good time to buy an annuity as rates hit a 14-year high?
Pensions

Is it a good time to buy an annuity as rates hit a 14-year high?

Average annual annuity income has risen by nearly £1,000 since the start of the year. We look at whether now is a good time to buy an annuity.
6 Dec 2022

Most Popular

Is it cheaper to leave the heating on low all day?
Personal finance

Is it cheaper to leave the heating on low all day?

The weather is getting colder and energy bills are rising, but is it really cheaper to leave the heating on low all day or should you only turn it on …
1 Dec 2022
Radiator vs electric heater – which is cheaper?
Personal finance

Radiator vs electric heater – which is cheaper?

We compare the costs, pros and cons of radiators and electric heaters and see which one will help keep your energy bill as low as possible.
28 Nov 2022
State pension errors – why tens of thousands of mothers could be missing out on millions in state pension payments
State pensions

State pension errors – why tens of thousands of mothers could be missing out on millions in state pension payments

LCP launches Mothers Missing Millions campaign amid DWP state pension errors.
3 Dec 2022