EADS's shareholders are said to be cool on the proposed deal, and understandably so. Mega-mergers have a reputation of too often failing to deliver the promised benefits. According to analysis by consultants Bain and Co, around half of acquisitions create value for shareholders. That doesn't sound that great to start with, but delve deeper into the numbers and it gets worse. The half that work tend to be smaller 'bolt-on' deals, easily swallowed up by the purchaser and which don't stretch its finances to breaking point, not deals so large that integrating them requires a small army of consultants. There are many reasons why mergers fail, but size is certainly one; miscalculating the level of cost savings is another, estimated to be a factor in two-thirds of failed M&A.
One of the biggest and most contentious deals I've had the pleasure of covering was Kraft's £11.5bn takeover of Cadbury in 2010, a case study in corporate opprobrium and broken promises. With the benefit of hindsight, though, it's hard not to be impressed with the price Cadbury's management squeezed out of Kraft's chief executive Irene Rosenfeld. She was warned by Warren Buffett not to overpay, but she ignored him and borrowed £7bn to fund the acquisition - a case, perhaps, of the narcissism that some say drives chief executives to try and build ever larger companies at a stroke.
Imagine my surprise then, when I trotted over to the Bloomberg terminal to check out Kraft's post acquisition performance expecting to see an at best stagnant share price. Since announcing the takeover, Kraft's shares have returned more than 50 per cent.
Do mega-mergers work after all? I'm still sceptical. Kraft has significantly underperformed Hershey, which turned its nose up at a chance to bid for Cadbury itself, over the same period. And just eighteen months after the deal closed, Kraft announced that it was to split itself two, its North American grocery business in one new organisation, and its global snacks business - including Cadbury - in another, to be named Mondelēz International.
That, of course, means more expensive investment banking bills, but at least there is evidence that corporate divorce in the form of demergers can create value (look no further than British Gas for a great example). Yet it's hardly a ringing endorsement of the strategic rationale for getting together in the first place. Should BAE-EADS ever tie the knot - and, given the political wrangling that accompanies this deal these are likely to be extremely expensive nuptials indeed - one imagines the honeymoon period will be similarly brief.
