Airbus / EADS M&A: Negotiating the Deal

Why did you enjoy the negotiations so much?

The different behaviors, different culture. Today, it’s so simple, because I’m used to it. But at that time, it was quite funny to see the differences. There were people who became colleagues; we’ve all left Airbus now. When EADS was formed, in 2000, the consolidation on the top was done. But all the work had to be continued on the bottom, especially to create this Airbus company, because we still had BAE owning shares in the consortium and not part of the EADS conglomerate. In fact, I did not stop at the EADS creation. I had to continue to create MBDA, so the missile business of Matra, of Aérospatiale, of BAE, of Marconi, of DASA, LFK and of Alenia.

I had to supervise and control the creation of the Airbus company, as a company, as a subsidiary of EADS, 80% owned by EADS and 20% owned by BAE, with a put option for BAE. In fact, it was a deferred sale of the shares of BAE. All this occupied me between 2000 and 2002. Two years of full activity on these JVs, cleaning the GIEs, making sure that we had operations up and running.

What did you learn most, about negotiation, during that time? Bringing people together and negotiating these mergers and deals?

Two key things. Firstly, always put yourself in the shoes of your counterpart and think as if you were in his position. It makes it much easier. One may think that hiding your agenda, not unveiling your objectives, is good. No. One of the easiest ways to achieve things is, what do you really want. Here’s what I’m looking for. Is there a way to accommodate what you wish to do, what I wish to do and what you don’t want to happen and I don’t want to happen? By putting those lists together makes it much easier.

The second thing I learned, in negotiating, was that being unreasonable never pays. You have people that think that if you put your demands that high, you will achieve a better result than if you start that close to your objective and get to your objective. For instance, you consider that you are happy to pay a billion for something and you start by saying, okay, I will pay you €100 million for it. If you consider it to be worth a billion, you’d better say, okay, I’m happy to pay €900m.

Because of the credibility?

It’s like in chess. If you consider your opponent to be stupid, you lose. If you consider your opponent is much cleverer than you are, you win.