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BAE SYSTEMS and EADS Form Paradigm Joint Venture and Agree to Realign Space Interests

London/Amsterdam, 25 July 2002

* Paradigm Secure Communications Ltd. established to manage Skynet 5
* EADS to acquire BAE SYSTEMS' 25 percent share in Astrium
* Integration of EADS' launcher activities made possible

BAE SYSTEMS and EADS are teaming to address military telecommunication satellite services. As a first important step, the partners will form a new joint venture company, Paradigm Secure Communications Limited, to address service provision requirements of the UK Ministry of Defence's Skynet 5 programme. BAE SYSTEMS will have control of the UK operations of this joint venture. Paradigm Secure Communications will contract with Astrium for the manufacture and provision of satellites and ground systems. Skynet 5 is the future military communications satellite system for the UK Ministry of Defence. Paradigm has been designated as the preferred bidder for this service provision.

In parallel, BAE SYSTEMS has today agreed to sell to EADS its 25 percent voting interest/27.5 economic interest in the Astrium space joint venture for EUR165 million. EADS currently holds the 75 percent voting interest/72.5 economic interest in Astrium. Completion of the sale is conditional upon clearance by the European Commission under the Merger Regulation and upon finalisation of the UK MoD contract for Skynet 5 with Paradigm Secure Communications Limited. Completion is expected to take place before the end of the year.

Astrium employs 8,400 persons, over 2,200 of whom are employed in the UK, and in the year 2001 had sales of EUR1.9 billion.

For EADS, the acquisition will allow the integration into a single company of all its space interests in the UK, France, Germany and Spain, and will increase the overall industrial and financial efficiency of the group's space business. This single company will have two main industrial subsidiaries, dedicated respectively to satellites and to launcher and orbital infrastructure.

The sale is in line with BAE SYSTEMS' strategy to focus on developing and delivering advanced systems and services in the defence and aerospace sectors.

"The agreements reached today pave the way for the future development of Astrium within EADS and demonstrates BAE SYSTEMS' commitment to develop the services and support elements of our business," said Chris Geoghegan, Chief Operating Officer, BAE SYSTEMS plc.

"This agreement will give us the ability to consolidate and develop space systems, one of our core businesses, and to continue and to expand a fruitful partnership with BAE SYSTEMS in military satellite communication services," said Francois Auque, Member of the EADS Executive Committee and Head of the Space Systems Division. "Consolidating our ownership of Astrium will allow EADS to enhance its strategic positioning in a rapidly changing market place," he added.

"EADS is very much at home in the UK. This move enhances the commitment to our already strong industrial presence, our British customer, our long-established partner BAE SYSTEMS and our 11,000 strong, highly-skilled UK-workforce," he added.


BAE SYSTEMS is a systems company, innovating for a safer world. BAE SYSTEMS employs nearly 100,000 people including Joint Ventures, and has annual sales of around £13 billion. The company offers a global capability in air, sea and land with a world-class prime contracting ability supported by a range of key skills. BAE SYSTEMS designs, manufactures and supports military aircraft, surface ships, submarines, space systems, radar, avionics, communications, electronics, guided weapon systems and a range of other defence products. BAE SYSTEMS is dedicated to making the intelligent connections needed to deliver innovative solutions.

About EADS:

EADS is the largest European aerospace company and the No. 2 worldwide with a turnover of EUR30.8 billion In 2001. The company has a workforce of more than 100,000. It is active in the sectors of commercial aircraft, helicopters, space, military transport and combat aircraft as well as defence technology and services. Among others, EADS holds 80 percent of Airbus, 100 percent of the helicopter manufacturer Eurocopter, 43 percent of the Eurofighter programme and 37.5 percent in the missile company MBDA.

About Astrium:

Astrium is a joint-venture, currently owned 75 percent by EADS and 25 percent by BAE SYSTEMS. Astrium focuses on its satellite business activities covering civil and military telecommunications and Earth observation, science and navigation programmes, avionics and equipment.


For BAE SYSTEMS: Phil Soucy
Phone +44 (0) 1252 384 797

For EADS: Roland Sanguinetti
Phone +33 (0) 1 42 24 24 26

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