Editing Marconi Electronic Systems (section)

=== Demerger ===
The 1997 merger of American corporations [[Boeing]] and [[McDonnell Douglas]], which followed the forming of [[Lockheed Martin]], the world's largest defence contractor in 1995, increased the pressure on European defence companies to consolidate. In June 1997, British Aerospace Defence managing director [[John Weston (businessman)|John Weston]] commented "Europe... is supporting three times the number of contractors on less than half the budget of the U.S.".<ref>{{cite news|first=Andrea|last=Rothman|author2=Landberg, Reed|url=http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/display?slug=2544541&date=19970615&query=Pressure+to+Unite|title=Europe Defense Firms Feel Pressure to Unite|newspaper=The Seattle Times|date=15 June 1997|access-date=12 September 2007|archive-date=17 May 2016|archive-url=http://arquivo.pt/wayback/20160517164431/http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/display?slug=2544541&date=19970615&query=Pressure+to+Unite|url-status=dead}}</ref> European governments wished to see the merger of their defence manufacturers into a single entity, a European Aerospace and Defence Company.<ref>{{cite news|title=Business: The Company File: Defence merger on the radar |url=http://news.bbc.co.uk/1/hi/business/the_company_file/130305.stm|publisher=BBC|date=10 July 1998|access-date=15 September 2007}}</ref>

As early as 1995, British Aerospace and the German aerospace and defence company [[DaimlerChrysler Aerospace]] (DASA) were said to be keen to create a transnational aerospace and defence company.<ref>{{cite news|first=Adam|last=Jones|title=Europe cries foul as New BAe emerges|newspaper=The Times|date=20 January 1999}}</ref> Merger discussions began between British Aerospace and DASA in July 1998. A merger was agreed between British Aerospace chairman [[Richard Evans (businessman)|Richard Evans]] and DASA CEO [[Jürgen E. Schrempp|Jürgen Schrempp]] in December 1998.<ref name="ftBAeDASA">{{cite news|first=Peter |last=Spiegel|title=The largest aerospace companies gather next week for the Farnborough air show but the event will be without its long-time unofficial host|newspaper=Financial Times|page=11|date=17 July 2004}}</ref>

GEC was also under pressure to participate in defence industry consolidation. Reporting the appointment of [[George Simpson, Baron Simpson of Dunkeld|George Simpson]] as GEC managing director in 1996, ''The Independent'' had said "some analysts believe that Mr Simpson's inside knowledge of BAe, a long-rumoured GEC bid target, was a key to his appointment. GEC favours forging a national "champion" defence group with BAe to compete with the giant US organisations".<ref>{{cite news|first=Russell|last=Hotten|title=GEC confirms Simpson job|newspaper=The Independent|page=17|date=19 March 1996}}</ref> When GEC put MES up for sale on 22 December 1998, BAE abandoned the DASA merger in favour of purchasing its British rival. The merger of British Aerospace and MES was announced on 19 January 1999.<ref>BAE Systems Annual Report 1999 p.22 BAE Systems plc (2000) Retrieved 27 October 2006</ref> Evans stated that in 2004 that his fear was that an American defence contractor would acquire MES and challenge both British Aerospace and DASA.<ref name="ftBAeDASA"/> The merger created a [[vertically integrated]] company which ''The Scotsman'' described as "[a combination of British Aerospace's] contracting and platform-building skills with Marconi's coveted electronics systems capability".<ref>{{cite news|first=Louise|last=Nevill|title=BAe and Marconi moving toward merger|newspaper=The Scotsman|page=17|date=4 January 1999}}</ref> for example combining the manufacturer of the Eurofighter with the company that provided many of the aircraft's electronic systems; British Aerospace was MES' largest customer.<ref>{{cite news|title=Speculation Rises on GEC Merger |newspaper=The Scotsman|date=28 December 1998}}</ref> In contrast, DASA's response to the breakdown of the merger discussion was to merge with Aérospatiale to create the European Aeronautic Defence and Space Company ([[Airbus|EADS]]), a [[horizontal integration]]. EADS has since considered a merger with [[Thales Group|Thales]] to create a "fully rounded" company.<ref name="integrated">{{cite news|title=Getting it together?|newspaper=The Economist|date=20 July 2002}}</ref>

While MES was responsible for the majority of GEC's defence sales other GEC companies achieved defence related sales, principally [[Alstom|GEC Alsthom]], [[Marconi Communications|GEC-Plessey Telecommunications]] (GPT) and GEC Plessey Semiconductors.