Goldman Sachs

The Goldman Sachs Group, Inc. NYSE: GS (referred to as GS, or just Goldman) is an investment bank. The firm was founded in 1869. Headquartered in downtown New York City at 85 Broad Street ([1]), Goldman operates globally with offices in leading financial centers, e.g. New York City, Frankfurt, London, Hong Kong and Tokyo.

Goldman is mostly involved in wholesale financial services, although it has a newer and growing Private Client Services arm. Its largest area of activity is proprietary trading, that is, executing trades for its own profit with its own money. In fact, investment banking accounts for only 5 percent of Goldman's profits.

Quick facts

  • Employed 20,722 people at the end of November 2004.
  • Pre-tax earnings in the 2003 fiscal year ending November 30 were $4.445 billion.
  • The CEO is Hank Paulson.

Lines of Business

Goldman Sachs is divided into three different lines of business: Investment Banking, Trading and Principal Investments, and Asset Management and securities services.

Investment Banking includes traditional investment banking, and mergers and acquisitions (M&A) advisory. Goldman Sachs is one of the leading investment banks, topping the league tables many times, especially in equity operations. In mergers and acquisitions, it gained fame historically by advising clients on how to avoid a hostile takeover. Goldman Sachs, for a long time during the 1980s, was the only major investment bank with a strict policy against helping to initiate a hostile takeover, which increased the firm's reputation immensely. This segment accounts for around 15 percent of Goldman Sach's revenues.

Trading and Principal Investments is the largest segment and profit center for Goldman. This segment consists of the revenues and profit gained from the Bank's trading activities, both on behalf of its clients and for its own account (called proprietary trading). Many trades however are done for both reasons. Most trading done by Goldman is not a "bet" of a particular outcome in the market, but rather attempting to sell something for an incrementally greater amount of money it was forced to buy something for, in the process of acting as a market maker. Like the rest of the Investment Banking industry, this occurs primarily in the bond market. Around 65 percent of Goldman's revenues and profits are from this area. Upon its IPO, Goldman predicted that this segment would not grow as fast as its Investment Banking division and would be responsible for a shrinking proportion of earnings. The opposite has been true, however.

The final segment is Asset Management and securities services. "Asset Management" is an industry term for mutual funds, of which Goldman runs many. This segment accounts for around 19 percent of Goldman's earnings. "Securities services" is mostly a reference to Prime brokerage, which is a stock brokerage for hedge funds that executes many trades and is a particularly profitable division within Goldman Sachs.

History

Goldman Sachs was founded by Marcus Goldman as a business which assisted other businesses in borrowing money via commercial paper (very short term loans). It grew organically from this base, but suffered a major setback when it setup what would be called today a giant hedge fund (Goldman Sachs Trading Co.) in 1929 which crashed in the resulting great depression. This damaged its repuation for a long time.

Sydney Weinberg became the head of Goldman Sachs. He was a relentless salesman, trying to befriend as many leaders of top businesses and governments as possible. His close friendship with the Ford family allowed Goldman Sachs to arrange for the Ford IPO, the largest in the world at that time. This was a major coup for the company which enhanced its reputation greatly. Others at Goldman realized that essentially all new business was brought in from Weinberg, and so instituted an outbound sales force to attempt to become less reliant on Weinberg. This had never been done before in investment banking.

Gustave Levy took over after Weinberg. He came from the firms trading department, and got Goldman Sachs into the business of trading for its own profit (its major source of profit today). John Whitehead and Weinbergs son next took over. They commited Goldman Sachs to expand internationally.

Alumni of Goldman Sachs

Many former partners of Goldman Sachs have gone on to hold prominent public positions including Robert Rubin the United States Secretary of the Treasury under Bill Clinton, Jon Corzine currently a United States Senator from New Jersey, and John Thain currently the CEO of the New York Stock Exchange. Also, Steven Friedman was Chairman of George W. Bush's National Economic Council, incidentally the position Rubin held before moving to Treasury.

Another former partner, Jack Ryan (Senate candidate), withdrew from his bid for the open United States Senate seat in Illinois after embarrassing allegations about his sexual past.

Apart from political careers, alumni of Goldman Sachs seek entrepreneurship and excel there:

  • J Christopher Flowers, a former partner who set up J.C. Flowers & Company, he is a member of the Forbes 400 list.
  • Edward S Lampert, a former protégé of Robert Rubin and founder of ESL Investments, is a member of the Forbes 400.

Scandals involving Goldman Sachs

Joyti De-Laurey

Joyti De-Laurey was convicted eleven to one in April 2004 by a UK jury for stealing more than £4m by forging cheques.

A spokesman for Goldman Sachs described the thefts as "gross abuse of trust and an extremely unpleasant incident for all those affected". The Financial Times called her a "queen of deceit", Scott Mead, the executive whose signature De-Laurey forged, called her a "Picasso of con-men— she was brilliant". Another previous boss of hers, Ron Beller said she was "a very clever con artist". She also worked for Jennifer Beller.

Critics have suggested that the case has been over-stated, as forging cheques does not require exceptional intelligence. Also, claims that forgeries were exceptional are questionable as another witness to the case, Ms. Sophie Pemberton, who is another employee of Mead's, stated that Mead "never signed anything" and that she regularly forged his signature.

De-Laurey's story was made into a television movie broadcast by the BBC on June 8, 2005. Titled The Secretary Who Stole £4 Million, it starred Meera Syal as Joyti De-Laurey, and featured contributions from her friends, family and co-workers.

Misleading analysis of telecommunications companies

In a statement issued by William Donaldson, chairman of the US securities and exchange commission on October 31st 2003, he said Bear Stearns, Credit Suisse First Boston, Goldman Sachs, Lehman Brothers, Merrill Lynch, Piper Jaffray, Salomon Smith Barney, and UBS Warburg (now known as UBS Securities) ("UBS") issued research reports that were not based on principles of fair dealing and good faith and did not provide a sound basis for evaluating facts, contained exaggerated or unwarranted claims about the covered companies, and/or contained opinions for which there were no reasonable bases in violation of New York Stock Exchange ("NYSE") Rules 401, 472 and 476(a)(6), and NASD, Inc., Rules 2110 and 2210 as well as state ethics statutes.

An analyst, Craig Kloner, when asked what his three most important goals for 2000 were, said "to get more investment banking revenue" ([2]) ([3]).

The Financial Times called it "the worst financial scandal in a generation". Donaldson fined Goldman-Sachs US$110m, and the investment banks as a whole $1.4bn ([4]) in the so called "global settlement".

Criticisms against Goldman Sachs

In 2002, Goldman Sachs paid US$ 1.65 million in fines for allegedly violating e-mail record keeping requirements. In 2003, Goldman Sachs paid US$ 110 million as part of the settlement over research improprieties when New York State Attorney General, Eliot Spitzer, fined Wall Street for bad behavior. In 2003, the company agreed to pay US$ 4.3 million in restitution and a US$ 5 million in penalty related to improper trading in US Treasury Securities and futures. In 2004, Goldman Sachs agreed to pay US$ 2 million to the Securities and Exchange Commission (SEC) for settling charges of promoting an IPO before the IPO registration became effective. The SEC also alleged that Goldman Sachs spoke to the media about an IPO by PetroChina before an initial registration was filed. Goldman Sachs also raked in hundreds of millions in fees for underwriting companies like PlanetRx.com, Webvan, etc., which later went bankrupt. Spear Leeds, a firm Goldman Sachs bought in 2000 and renamed as Goldman Sachs Execution & Clearing LP, had to pay US$ 45.3 million to the National Association of Securities Dealers (NASD) in 2004 to settle charges that it traded ahead of customers. In 2005, Goldman Sachs Execution & Clearing LP was fined US$ 1 million by NASD for hiding IPO allocations from the Depository Trust Corporation.

Diversity

Goldman Sachs received a 100% rating on the Corporate Equality Index released by the Human Rights Campaign starting in 2004, the third year of the report. In addition, the company was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.

References

Goldman Sachs: The Culture of Success. Lisa Endlich. Little, Brown and Company. 1999. ISBN 0316643734


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ISBN 0316643734. Some are:. 1999. This is not a complete list, only major projects are included. Little, Brown and Company. The company either leads or has a major stake in some of the most high profile, high technology civil and military aerospace and maritime projects in the world. Lisa Endlich. BAE Systems is in an enviable position.

Goldman Sachs: The Culture of Success. Primary businesses are; airborne radar systems, Electronic Warfare (EW) systems, military lasers and electro-optical systems. In addition, the company was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine. SELEX S&AS incorporates the majority of the former BAE Systems Avionics business. Goldman Sachs received a 100% rating on the Corporate Equality Index released by the Human Rights Campaign starting in 2004, the third year of the report. SELEX Sensors and Airborne Systems (SELEX S&AS), a joint venture with Finmeccanica in which BAE Systems has a 25% stake, was formed in May 2005 (see Expansion & further consolidation. In 2005, Goldman Sachs Execution & Clearing LP was fined US$ 1 million by NASD for hiding IPO allocations from the Depository Trust Corporation. The remaining shares are held by EADS (37.5%) and Finmecannica (25%).

Spear Leeds, a firm Goldman Sachs bought in 2000 and renamed as Goldman Sachs Execution & Clearing LP, had to pay US$ 45.3 million to the National Association of Securities Dealers (NASD) in 2004 to settle charges that it traded ahead of customers. BAE Systems holds a 37.5% share interest in the World's secong largest missile systems manufacturer, MBDA. Goldman Sachs also raked in hundreds of millions in fees for underwriting companies like PlanetRx.com, Webvan, etc., which later went bankrupt. This co-operation dates back to 1995 when Saab and British Aerospace established a joint venture for Gripen export marketing. The SEC also alleged that Goldman Sachs spoke to the media about an IPO by PetroChina before an initial registration was filed. Formed in 2001, Gripen International is a joint company for the marketing of the JAS-39 Gripen fighter. In 2004, Goldman Sachs agreed to pay US$ 2 million to the Securities and Exchange Commission (SEC) for settling charges of promoting an IPO before the IPO registration became effective. The company is based in Bremen.

In 2003, the company agreed to pay US$ 4.3 million in restitution and a US$ 5 million in penalty related to improper trading in US Treasury Securities and futures. Atlas Elektronik, a German marine systems business, is a wholly owned subsidiary of BAE Systems. In 2003, Goldman Sachs paid US$ 110 million as part of the settlement over research improprieties when New York State Attorney General, Eliot Spitzer, fined Wall Street for bad behavior. The company provides vehicle management, power systems, guidance and control interfaces for vehicles, aircraft and UAVs. In 2002, Goldman Sachs paid US$ 1.65 million in fines for allegedly violating e-mail record keeping requirements. Platform Solutions is based in the US as part of BAE Systems North America with facilities in the UK. Donaldson fined Goldman-Sachs US$110m, and the investment banks as a whole $1.4bn ([4]) in the so called "global settlement". This company is responsible for BAE Systems’ extensive range of underwater warfare products:.

The Financial Times called it "the worst financial scandal in a generation". The order for the initial batch of three ships was place in 1997, with Vickers Shipbuilding and Engineering, since absorbed into BAE Systems . An analyst, Craig Kloner, when asked what his three most important goals for 2000 were, said "to get more investment banking revenue" ([2]) ([3]). The Astute class is a new generation of nuclear attack submarine (SSN) for the Royal Navy. In a statement issued by William Donaldson, chairman of the US securities and exchange commission on October 31st 2003, he said Bear Stearns, Credit Suisse First Boston, Goldman Sachs, Lehman Brothers, Merrill Lynch, Piper Jaffray, Salomon Smith Barney, and UBS Warburg (now known as UBS Securities) ("UBS") issued research reports that were not based on principles of fair dealing and good faith and did not provide a sound basis for evaluating facts, contained exaggerated or unwarranted claims about the covered companies, and/or contained opinions for which there were no reasonable bases in violation of New York Stock Exchange ("NYSE") Rules 401, 472 and 476(a)(6), and NASD, Inc., Rules 2110 and 2210 as well as state ethics statutes. The submarines are constructed at BAE Systems’ yard at Barrow-in-Furness. Titled The Secretary Who Stole £4 Million, it starred Meera Syal as Joyti De-Laurey, and featured contributions from her friends, family and co-workers. BAE Systems Submarines, until 2003 a unit within BAE Systems Marine, is responsible for the development and production of the Astute class submarine.

De-Laurey's story was made into a television movie broadcast by the BBC on June 8, 2005. An important part of the company is Property & Environmental Services which manages BAE Systems’ own property and provides specialist services such as defence site decommissioning. Sophie Pemberton, who is another employee of Mead's, stated that Mead "never signed anything" and that she regularly forged his signature. Shared Services also manages BAE Systems’ Advanced Technology Centre and the company’s IT & e-services contracts. Also, claims that forgeries were exceptional are questionable as another witness to the case, Ms. It manages BAE Systems’ car and aircraft fleets, employee payroll, services and benefits. Critics have suggested that the case has been over-stated, as forging cheques does not require exceptional intelligence. BAE Systems Shared Services is the group with BAE Systems responsible for managing resources and directing operations.

She also worked for Jennifer Beller. While this unit no longer produces aircraft it continues to lease aircraft and provide support, spares and training for its products, the. Another previous boss of hers, Ron Beller said she was "a very clever con artist". BAE Systems Regional Aircraft produced the last fully UK-built airliner in November 2001, the Avro RJX (formerly the BAE 146). The Financial Times called her a "queen of deceit", Scott Mead, the executive whose signature De-Laurey forged, called her a "Picasso of con-men— she was brilliant". Businesses purchased in the US by the former GEC businesses before the merger and BAE Systems after the merger include:. A spokesman for Goldman Sachs described the thefts as "gross abuse of trust and an extremely unpleasant incident for all those affected". This has led to a situation where BAE Systems' North American operations now account for approximately 30% of the company’s profits while its UK operations (its "home market") now accounts for less than 25%.

Joyti De-Laurey was convicted eleven to one in April 2004 by a UK jury for stealing more than £4m by forging cheques. This is important due to the unmatched $400bn spent on defence by the US government. Apart from political careers, alumni of Goldman Sachs seek entrepreneurship and excel there:. Perhaps the single most important division of BAE Systems, it is the business which gives BAE Systems access to the American aerospace and defence market. Another former partner, Jack Ryan (Senate candidate), withdrew from his bid for the open United States Senate seat in Illinois after embarrassing allegations about his sexual past. BAE Systems North America’s headquarters are in Rockville, Maryland and the division has facilities in 30 US states and Washington D.C. Bush's National Economic Council, incidentally the position Rubin held before moving to Treasury. As well as services, construction products include:.

Also, Steven Friedman was Chairman of George W. At the same time the Barrow shipyard, BAE Systems Marine (VSEL), became part of BAE Systems Submarines (see below). Many former partners of Goldman Sachs have gone on to hold prominent public positions including Robert Rubin the United States Secretary of the Treasury under Bill Clinton, Jon Corzine currently a United States Senator from New Jersey, and John Thain currently the CEO of the New York Stock Exchange. This new company took the surface vessel shipyards at Scotstoun and Govan, formerly part of BAE Systems Marine. They commited Goldman Sachs to expand internationally. Formed in 2003 BAE Systems Naval Ships was formed to centralise BAE Systems' shipbuilding operations. John Whitehead and Weinbergs son next took over. With the acquisition of United Defense Industries in 2005 Land Systems became part of BAE Systems Land and Armaments, based in Arlington, VA, USA.

He came from the firms trading department, and got Goldman Sachs into the business of trading for its own profit (its major source of profit today). BROACH), Multiple Launch Rocket Systems, Tank and Artillery Ordnance, Electronic Systems. Gustave Levy took over after Weinberg. This group provides Armoured vehicles, explosives, Artillery Ammunition, Mortars, Small Arms, Naval Ammunition Launchers, Warheads (e.g. This had never been done before in investment banking. BAE Systems Land Systems was created in 2004 to consolidate BAE Systems’ land warfare systems expertise by bringing together RO Defence and the newly acquired Alvis Vickers. Others at Goldman realized that essentially all new business was brought in from Weinberg, and so instituted an outbound sales force to attempt to become less reliant on Weinberg. The RAF Tornado GR4 upgrade is an excellent example of the work undertaken by the CS&S division.

This was a major coup for the company which enhanced its reputation greatly. BAE Systems Customer Solutions & Support (CS&S) provides through life support and upgrades for defence forces. His close friendship with the Ford family allowed Goldman Sachs to arrange for the Ford IPO, the largest in the world at that time. The division is a major supplier of defence electronics, integrated command & control (C²) systems, radar, simulators, meteorological systems, data links and C4ISR battle management systems. He was a relentless salesman, trying to befriend as many leaders of top businesses and governments as possible. BAE Systems Integrated System Technologies (to be known informally as Insyte) was formed on May 3, 2005 by bringing together BAE Systems' interests in C4ISR and the UK operations of AMS following the Eurosystems Transaction (see Expansion & further consolidation for further details). Sydney Weinberg became the head of Goldman Sachs. Air Systems manages BAE Systems’ military aircraft projects, primarily:.

This damaged its repuation for a long time. Airbus UK started work on the wings for the Airbus A380 in August 2002. It grew organically from this base, but suffered a major setback when it setup what would be called today a giant hedge fund (Goldman Sachs Trading Co.) in 1929 which crashed in the resulting great depression. In 2001 Airbus Industrie became Airbus S.A.S., the Airbus Integrated Company. Goldman Sachs was founded by Marcus Goldman as a business which assisted other businesses in borrowing money via commercial paper (very short term loans). In 1979 BAe rejoined the Airbus consortium. "Securities services" is mostly a reference to Prime brokerage, which is a stock brokerage for hedge funds that executes many trades and is a particularly profitable division within Goldman Sachs. The British government withdrew support in 1969 but Hawker Siddeley was allowed to continue as supplier of the aircraft's wings due to the advanced stages of design and the reluctance of other nations to take over the wing design.

This segment accounts for around 19 percent of Goldman's earnings. Hawker Siddeley (which merged with British Aircraft Corporation (BAC) in 1977 to form British Aerospace) was part of the first Airbus projects, the Airbus A300. "Asset Management" is an industry term for mutual funds, of which Goldman runs many. Filton is also home to a retired Concorde. The final segment is Asset Management and securities services. Airbus UK has two main sites; Broughton in North Wales carries out final assembly and Filton produces components and wing sections. The opposite has been true, however. Airbus UK is a wholly owned subsidiary of BAE Systems and produces wings for the Airbus aircraft family.

Upon its IPO, Goldman predicted that this segment would not grow as fast as its Investment Banking division and would be responsible for a shrinking proportion of earnings. It's not just business, it's political." [5]. Around 65 percent of Goldman's revenues and profits are from this area. This is a business that takes time to understand. Like the rest of the Investment Banking industry, this occurs primarily in the bond market. Turner did suggest however that Olver was on a learning curve, "He'll fully understand it [in 5 years]. Most trading done by Goldman is not a "bet" of a particular outcome in the market, but rather attempting to sell something for an incrementally greater amount of money it was forced to buy something for, in the process of acting as a market maker. In June 2005 Turner heightened investor concerns of boardroom tensions by crticising Olver's knowledge of the defence industry, "[he] has a low knowledge base and knows nothing about our industry" [4].

Many trades however are done for both reasons. These suggest that Olver has been involving himself in parts of the business which a Chairman traditionally hasn't. This segment consists of the revenues and profit gained from the Bank's trading activities, both on behalf of its clients and for its own account (called proprietary trading). Reports in 2005 have suggested that relations between the Chairman (Olver) and CEO (Turner) are strained. Trading and Principal Investments is the largest segment and profit center for Goldman. Harry Stonecipher, former CEO of Boeing, has criticised the vertical integration of BAE Systems. This segment accounts for around 15 percent of Goldman Sach's revenues. This review will advise the group on what its strategy should be and hence what acquisitions or disposals it needs to make.

Goldman Sachs, for a long time during the 1980s, was the only major investment bank with a strict policy against helping to initiate a hostile takeover, which increased the firm's reputation immensely. In July, 2004 Olver announced a review of all of BAE Systems' activities, which will be conducted by independent analysts lead by investment bank Morgan Stanley. In mergers and acquisitions, it gained fame historically by advising clients on how to avoid a hostile takeover. We think it is good to be taking a fresh look at things." [3]. Goldman Sachs is one of the leading investment banks, topping the league tables many times, especially in equity operations. Significantly the first meeting between Olver and Hoon is said to have gone well, a MoD official has said "He is a man we can do business with. Investment Banking includes traditional investment banking, and mergers and acquisitions (M&A) advisory. It is understood that Turner, like Evans, has a poor working relationship with senior Ministry of Defence officials, including the Defence Secretary Geoff Hoon.

Goldman Sachs is divided into three different lines of business: Investment Banking, Trading and Principal Investments, and Asset Management and securities services. Weston was forced out in what was a surprise move. . BAE Systems' CEO is Mike Turner, who replaced John Weston in 2002. In fact, investment banking accounts for only 5 percent of Goldman's profits. BAE Systems took a hit of $1.369bn on these projects. Its largest area of activity is proprietary trading, that is, executing trades for its own profit with its own money. This was due to cost overruns of the Nimrod MR4 maritime reconnaissance/attack aircraft and the Astute SSN projects.

Goldman is mostly involved in wholesale financial services, although it has a newer and growing Private Client Services arm. This appointment came at a significant time with stock market confidence still recovering from a shock profit warning in December 2002. New York City, Frankfurt, London, Hong Kong and Tokyo. Dick Olver, formerly the deputy chief-executive of BP, succeeded Sir Richard on July 1, 2004. Headquartered in downtown New York City at 85 Broad Street ([1]), Goldman operates globally with offices in leading financial centers, e.g. In late March 2004, after more than 30 years with the company (and its predecessors), BAE Systems' longstanding Chairman Sir Richard Evans announced his successor. The firm was founded in 1869. In the company's 2003 Annual Report Sir Richard Evans sums up BAE Systems' strategy since the Marconi merger:.

NYSE: GS (referred to as GS, or just Goldman) is an investment bank. On May 3, 2005, the Eurosystems Transaction was finalised with:. The Goldman Sachs Group, Inc. On January 28, 2005 BAE Systems and Finmeccanica announced the intention to dissolve their partnership in the AMS joint venture with AMS' UK and Italian operations to be taken over by the respective partners as arranged through the Eurosystems Transaction. Edward S Lampert, a former protégé of Robert Rubin and founder of ESL Investments, is a member of the Forbes 400. UDI manufactures combat vehicles, artillery systems, naval guns, missile launchers and precision guided munitions. Flowers & Company, he is a member of the Forbes 400 list. UDI is primarily a land systems manufacturer, boosting BAE Systems' involvement in this sector and its sales in the important North American market.

J Christopher Flowers, a former partner who set up J.C. On March 7, 2005 BAE Systems announced the $3.974bn acquisition of the United States defence company United Defense Industries (UDI). The CEO is Hank Paulson. On February 20, 2005 The Observer reported that BAE Systems was considering selling its 20% stake in Airbus to pursue further acquisitions in the US; a BAE Systems source denied any such move. Pre-tax earnings in the 2003 fiscal year ending November 30 were $4.445 billion. It has been seen as an attempt to keep such a strong competitor "at bay" in BAE Systems' "backyard.". Employed 20,722 people at the end of November 2004. What had seemed a certain win for the US company was stopped by BAE Systems' surprise move.

On June 4, 2004 BAE Systems outbid General Dynamics for Alvis Vickers. As of 2005 the more likely move for BAE Systems' shipbuilding operations is their merger with other British shipyards to form a "Newco" shipbuilding company. BAE Systems without its shipbuilding assets would be a more attractive partner to an American company such as Boeing - which has stated that the shipbuilding operations are of no interest to them. If it decided to sell it was understood that General Dynamics would like to acquire the submarine building facilities at Barrow, while Vosper Thornycroft was said to be interested in the remaining yards.

The company would only say that it was reviewing its operations. In May 2004, it was reported that BAE Systems was considering selling its shipbuilding division, the two Clyde shipyards and the Barrow-in-Furness yard. BAE Systems faces considerably fewer hurdles in this sense than their European counterparts, as there is a high degree of integration between the US and UK defence establishments. This is particularly the case if BAE Systems can win prime-contractor status on a major project.

The company already has $9bn worth of sales to the Pentagon and any further move into the North American market would yield yet more. The appeal of a link with a North American company is irresistible as the US defence market is by far the largest in the world. However, if that were the only stumbling block, it seems likely that BAE Systems would gladly sell its minority share in Airbus to gain a greater share in North American aerospace and defence projects. Later that year the Boeing's Chief Executive denied any possibility of a North American merger on the grounds of "conflict of interest" pertaining to the affiliation with the Airbus consortium.

In June 2003, rumours started to circulate about a possible merger with either Boeing (who acquired BAE Systems' former partner McDonnell Douglas in 1997) or Lockheed Martin. This deal produces nearly half of the company's profits, £411m ($700m) out of £980m in 2003. Of all the company's activities the most profitable are the Al Yamamah contracts to supply and support the Royal Saudi Air Force. With almost total consolidation of the defence industry on the European continent, BAE Systems turned its attention to North America, for example acquiring Lockheed Martin Control Systems, (LMCS) which produces controls for the B-2 Spirit bomber, the C-17 Globemaster strategic transport, the F/A-18, the Boeing 757 and Boeing 767 commercial jets.

Various conditions were attached to approval of the merger between BAe and MES. These Articles include the following requirements:. This shareholding prevents amendments of certain parts of the Articles of Association without the Secretary of State's permission. This special share, with a nominal value of £1, is held on behalf of the Secretary of State for Trade and Industry.

BAE Systems inherited the "special" shareholding that was established when British Aerospace was privatised. Major European companies such as Thales and EADS are unlikely to ever be awarded, for example, a position relative to BAE Systems' involvement in the F-35 Joint Strike Fighter programme. Since the creation of BAE Systems the company has steadily increased its investment in, and its revenues from, the US, while continental European companies have made limited moves into that massive market. This group was joined by Spain’s CASA following an agreement in December 1999.

Following that decision, DASA instead merged with Aerospatiale to create the European Aeronautic Defence and Space Company (EADS). This move, to create what could be described as a UK company compared to what would have been an Anglo-German firm, made the possibility of penetration of the United States (US) defence market more likely. It was widely anticipated that BAe would merge with Germany’s DASA to form a pan-European aerospace giant, however BAe chose instead to merge with GEC’s defence electronics business. The merger had been agreed on April 27, 1999.

It was formed on November 30, 1999 with the merger of British Aerospace (BAe) and Marconi Electronic Systems (MES), the defence arm of The General Electric Company (GEC). . Based in the United Kingdom (UK) the company has extensive worldwide interests, particularly North America. BAE Systems, plc is the world's fourth largest defense contractor [2] and a commercial aerospace products manufacturer.

This is due for delivery around 2018. Future Offensive Air System
BAE Systems seem well placed to provide the replacement for the Tornado in the deep strike role. Royal Navy CVF
Future aircraft carrier, produced together with the Thales Group. Type 45 Destroyer
Next generation Royal Navy air defence destroyer, armed with the PAAMS missile defence system.

Astute class submarine
Next generation Royal Navy nuclear-powered attack submarine. Guns and turrets. Ammunition. 155mm Field Howitzer.

Bofors Defence

    . Mk41 Vertical Launching System (VLS). Crusader. M113 Family.

    M109 Paladin. M3 Bradley Cavalry Fighting Vehicle. M2 Bradley Infantry Fighting Vehicle. CAESAR advanced artillery system.

    Advance Gun System (AGS) for next generation United States Navy surface combatants. United Defense

      .
        . M777 howitzer.

        Challenger II. BAE Systems Land Systems

          . BAE Systems Land and Armaments
            . Sea Harrier FA2
            Marinised Harrier, primarily air defence.

            GR9 is an avionics and weapons upgrade of the standard GR7 to allow carriage of the latest smart weapons, new inertial navigation and Global Positioning Systems. Harrier GR7/GR9
            Offensive support aircraft. Tornado F3
            Primary RAF air defence aircraft (to be replaced by Typhoon). Addition of MBDA's Brimstone and Storm Shadow missiles will increase the potency of the aircraft.

            Tornado GR4
            Primary RAF strike aircraft, recently upgraded from GR1 standard. F-35 Joint Strike Fighter
            Produced with Lockheed Martin Aeronautics and Northrop Grumman. Eurofighter Typhoon
            Produced with EADS and Alenia Aeronautica, advanced air-to-air fighter with air-to-ground capabilities. Suffering from massive cost increases and delays.

            BAE Nimrod MRA4
            Upgraded Nimrod MR2 maritime patrol aircraft. See also T-45 Goshawk, aircraft carrier-ready Hawk variant for the United States Navy. BAE Hawk
            Advanced jet trainer/light attack. Produced through Airbus Military.

            Airbus A400M
            Strategic airlifter to compete with 1st generation C-130 Hercules. Airbus
            BAE Systems manufactures the wings for the entire Airbus family, the A300, A310, A318, A319, A320, A321, A330, A340, A350 (yet to be formally launched) and A380 (right). SELEX Sensors and Airborne Systems (25%). Saab Military Aircraft (20.5%).

            MBDA (37.5%). Eurofighter Jagdflugzeug GmbH (33%). (20%). Airbus S.A.S.

            Acoustics countermeasures. Remote minesweepers. Spearfish torpedo. Stingray torpedo.

            BAe 748. Jetstream. BAe ATP. Avro RJ/BAE 146 family.

            2005 - United Defense Industries. 2004 - ALPHATECH. 2004 - DigitalNet Holdings Inc. 2004 - Boeing Commercial Electronics.

            2004 - STI Government Systems. 2003 - MEVATEC. 2003 - Advanced Power Technologies, Inc (APTI). 2000 - Lockheed Martin Control Systems (LCMS).

            1998 - Tracor. Offshore patrol vessels. Type 45 Destroyer. Royal Navy Future Carrier (CVF).

            CS&S Naval has completed the reactivation of the Royal Navy's Type 22 Frigates for Romania. Past projects include reactivation of the Upholder class, now reactivated as the Victoria Class submarines for the Canadian Government, and Vanguard class upgrades. CS&S Naval provides maintenance, repairs, minor and major refits for naval vessels. This includes simulator construction and support and operation of the RAF’s North Sea Air Combat Manoeuvring Instrumentation (AMCI) Range.

            Training Solutions provides a wide range of services. BAE Systems Australia provides the same services as the wider CS&S organization but is based in Australia. Operational Services provides spares and support for BAE Systems products including the Hawk, VC-10, Canberra, Nimrod and Jaguar aircraft as well as naval products. Nimrod MRA4.

            BAE Hawk. F-35 Joint Strike Fighter. Eurofighter Typhoon. the avionics portions of BAE Systems and Finmeccanica being brought together to form the new SELEX Sensors and Airborne Systems (S&AS) joint venture held by shares of 25% and 75% respectively, with the option for Finmeccanica to later purchase the remaining 25%.

            the communications systems portions of AMS and BAE Systems being sold to Selenia Communications, a division of Finmeccanica. the UK operations of AMS (minus air traffic control and communication systems) being brought together with the C4ISR division of BAE Systems (minus communication systems) to form the new Integrated System Technologies (Insyte) division of BAE Systems. The remit of this job was strictly set out, including the qualifications (length of time with the company etc), access to staff and information, and independence. A compliance officer was appointed by BAE Systems to ensure the new company followed these requirements and procedures.

            Other relevant projects were; the Future Scout & Cavalry System (FSCS)/TRACER Program (“FSCS/TRACER Program”), Skynet 5, Astute class Training Programme and MES shipbuilding projects. An example of this was the initial stages of the Joint Strike Fighter programme where MES was involved in Boeing's X-32 project and BAe supported Lockheed Martin's X-35 bid. Due to the competition of BAe and MES in various major defence projects, the company was ordered to set up various "firewalls" to prevent interaction between the former MES and BAe teams on those projects. the new subsidiaries must not automatically receive sub-contracts.

            BAE Systems must competitively tender sub-contracts, i.e. including external companies) on equal terms. Further these subsidiaries must be available to all potential prime contractors (i.e. The MES shipyards and Marconi Avionics were to be kept as subsidiaries of the new company, with independent financial accounts.

            The CEO and Chairman must be British. The majority of the board must be British citizens. No foreign person, or persons acting together, may hold more than 15% of the company's shares.

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