Boeing, McDonnell Douglas merger ends in stalemate Disagreements on price, leadership halt talks

January 17, 1996|By SEATTLE TIMES

SEATTLE -- Talks aimed at Boeing Co.'s purchase of the McDonnell Douglas Corp. apparently have broken down because the two aerospace giants have been unable to agree on a price or who would lead the company.

The deal, which could have cost Boeing $12 billion or more, would have created a powerful global leader in the industry. A combined company would have had more than $35 billion in sales and 185,000 employees.

The breakdown means continued heavy competition to book orders from airlines worldwide. Last year, McDonnell Douglas launched its MD-95, a model that competes against Boeing's new 737s.

The Wall Street Journal reported yesterday that despite a formidable team of investment and legal advisers assembled by both sides, the companies could not agree.

"For the time being, it appears that the issue is dead, but there still could be some spinoffs or other mergers of separate divisions," said Paul Nisbet, an aerospace analyst with JSA Research in Providence, R.I.

McDonnell Douglas reportedly rejected early overtures by Boeing but later entered the talks.

The Journal reported that a major sticking point arose over the amount of money McDonnell Douglas executives wanted for stepping aside. Harry Stonecipher, 59, Douglas chairman, was said to want a leading role in the combined company that Boeing officials could not accept.

Boeing Chairman Frank Shrontz, 64, faces retirement next year; President Phil Condit is 54.

Boeing officials, who never confirmed the merger talks, would not comment on yesterday's reports, said spokesman Paul Binder.

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