Jet Makers' Stockholders Bless Buyout -- Companies To Merge Aug. 4
Seattle Times Business Reporter
With the approval of shareholders yesterday, Boeing is on final approach toward a landing Aug. 4 that will create the world's largest aerospace company, with $48 billion in annual sales.
Shareholders for Boeing and McDonnell Douglas in St. Louis overwhelmingly approved the buyout in meetings yesterday. Boeing is buying McDonnell Douglas for $16 billion in stock, based on the closing price of Boeing shares yesterday.
McDonnell Douglas shareholders will receive about 1.3 shares of Boeing stock for each McDonnell Douglas share. Boeing shareholders approved an increase in the number of Boeing shares.
Two minor checkpoints remain before the closing of the purchase, expected Aug. 1. Final approval by the European Union on antitrust concerns is expected Wednesday, and tax papers will be filed Friday in Maryland, where McDonnell Douglas is incorporated.
"Today, I believe we have been part of making history," Boeing Chairman Phil Condit told shareholders. "I believe that by working together, we will, this company will, define the future of flight."
The merger will combine the largest maker of commercial aircraft in the world with the biggest maker of fighter aircraft.
In St. Louis, John McDonnell, chairman of the company his father founded in 1939, told his shareholders that "today fulfills the goal I set for our company when I became chairman, to become the pre-eminent aerospace company in the world."
Acknowledging that the day was tinged with sadness, he said: "There is no doubt in my mind that our merger with Boeing represents the best. We are surrendering our independence to be part of something greater."
The merger was approved by 76 percent of McDonnell Douglas shareholders, easily surpassing the two-thirds majority required.
Condit will continue to run the company, and McDonnell Douglas Chairman Harry Stonecipher will be president. The Seattle-based company will have about 220,000 employees. Condit said big job cuts aren't planned. The company has been hiring thousands of employees a month to try to meet surging demand for Boeing planes.
Relatively modest rises in employment are expected in the months ahead because business at both companies is growing.
The task to integrate the two companies will be enormous. But Condit said after the meeting that he and others have been surprised to find the cultures are more similar than they expected. People in St. Louis factories use the same words and language as at Boeing.
Stonecipher said the combined company is committed to the Douglas operation in Long Beach, Calif.
"We will continue to manufacture commercial aircraft," he told shareholders.
Condit said merger teams will have to decide the division's future but said operations "are not marginal" and that there is "some real potential there."
The plant produces MD-90 narrow-body jets (which compete with Boeing 737s), the MD-11 wide-body and the C-17 military transport. It also is developing the 100-seat MD-95.
Condit said it is unlikely Boeing will move any final assembly work to Long Beach. However, he said some parts production could occur there. Boeing has been attempting to boost production to a record 43 planes a month by next year.
Another major task ahead is to integrate employee benefit and pension programs. Condit said Boeing's employee stock plan probably will be extended to McDonnell employees. Union representation at the various plants also will take major attention because so many are involved.
Stonecipher said it would take a year to 18 months to fully integrate the two companies, but Condit said they hoped to have a lot in place by the end of the year.
Stonecipher's salary at Boeing has not been revealed. Last year, he was paid about $1.75 million in salary and bonus. Condit, then president of Boeing, was paid $1.33 million in salary and bonus.
Information from Reuter was used in this report.
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