Lobbyists to sell merger of defense firms to Washington

Two teams of lobbyists have been hired to help assuage any
national-security concerns that might arise in Washington over the
merger of the European defense companies BAE Systems and EADS.

The two defense firms disclosed last week that they are in merger negotiations. If BAE and EADS combine, the new firm would become one of the world’s largest aerospace and defense companies.

{mosads}BAE hired two lobby firms in Washington last month to help with outreach to policymakers on the proposed merger. Elmendorf Ryan and Mercury/Clark & Weinstock have been lobbying on the “proposed combination of BAE Systems and EADS” since Aug. 1, according to lobbying disclosure records.

A spokesman for BAE said the K Street shops were hired in relation to the merger talks.

“The firms were retained in coordination with outside legal and financial advisers involved in the transaction discussions,” said Brian Roehrkasse, the BAE spokesman, in a statement.

Roehrkasse said the lobbyists are telling officials that the merger will have no impact on BAE’s substantial work for the U.S. government.

“The firms are supporting outreach activities to inform select government officials that BAE Systems Inc. will continue to operate as a U.S. company under agreements with the U.S. government and that there will be no impact on BAE Systems’ ability to provide our existing portfolio of products and services, including those of a sensitive or classified nature, to our U.S. government customers now or in the future,” Roehrkasse said.

The lobbyists hired by BAE for the merger talks include some big names.

At Elmendorf Ryan, Steve Elmendorf, a former senior adviser to ex-House Democratic Leader Richard Gephardt (Mo.), and Jimmy Ryan, once a senior aide to Senate Majority Leader Harry Reid (D-Nev.), are among the lobbyists working for BAE.

Former Rep. Vin Weber (R-Minn.) and Ed Kutler, a former senior adviser to ex-House Speaker Newt Gingrich (R-Ga.), are among those working for BAE at Mercury/Clark & Weinstock.

Loren Thompson, a military analyst at the Lexington Institute, said the lobbyists could help explain the ins and outs of the deal to lawmakers.

“Although this is mainly a European transaction, it needs to be presented to key legislators and regulators in that it presents no danger to U.S. security,” said Thompson, who is also a consultant to BAE. “There aren’t antitrust issues, but there may be security concerns. The structure of the transaction needs to be explained to all the players.”

On Capitol Hill, members of the House and the Senate Armed Services committees could take an interest in how the merger is structured, and might ask if the deal would have any impact on national security.

“BAE probably already has and will continue to talk to all the members of the committees interested in defense. This transaction is mainly about defense in the U.S.,” Thompson said.

Both companies have facilities in the United States. EADS North America is headquartered in Herndon, Va., and BAE has several locations in the Washington, D.C., area.

Under the proposed merger, EADS would own 60 percent of the new company, with BAE owning the other 40 percent. They plan, however, to keep some of their work on behalf of the Pentagon separate.

Discussions are ongoing to bring the companies together. European governments will likely have a big role in the merger process.

“There is no certainty at this stage that the discussions will ultimately lead to a transaction,” BAE said in a statement on its website last week.