Investing.com -- Shares of Airbus (EPA:AIR) and Leonardo (BIT:LDO) edged lower in today’s trading session, with Airbus down by 0.5% and Leonardo falling by 1.6%.
The slight decline comes as Bloomberg reports that both companies have engaged bankers to explore a merger between Airbus’ space business and Thales (EPA:TCFP) Alenia Space, which is jointly owned by Thales and Leonardo.
The potential consolidation is seen as a strategic move to reduce excess capacity in the space industry. However, the financial impact on the involved companies is expected to be modest.
Citigroup (NYSE:C) analysts commented on the merger, stating, "Overall, we see a merger as beneficial by taking out excess capacity but, as we published in July 2024, we believe the impact on the three parent companies’ shares will be limited, producing savings of about Eur110m – when shared between the companies, this is 1% of 2024 EBIT for Airbus, 1.5% for Thales and 1.3% for Leonardo – nice but not too material."
The muted market reaction reflects the analysts’ perspective that while the merger could streamline operations, it is not anticipated to significantly affect the earnings of Airbus, Thales, or Leonardo. The projected savings represent a small fraction of the companies’ expected earnings before interest and taxes (EBIT) for 2024.
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