Shareholders Ok Boeing Deal Mcdonnell Douglas Merger Will ‘Redefine The Future Of Flight’

Shareholders of Boeing Co. and McDonnell Douglas Corp. voted overwhelmingly Friday to merge the longtime rivals into the world’s largest aerospace company.

Boeing Chairman Phil Condit said afterward that the combined companies “will redefine the future of flight.”

Boeing shareholders approved the $15 billion transaction at a Seattle meeting by slightly more than 99 percent. McDonnell Douglas shareholders met simultaneously in St. Louis and 75.8 percent voted for the deal.

Both Condit and his counterpart, McDonnell Douglas Chairman John McDonnell noted the significance of combining companies whose founders - William Boeing, James S. McDonnell and Donald Douglas - witnessed the dawn of flight.

“My father was the first employee of McDonnell Aircraft Co., so it’s perhaps fitting that I will be the last to retire from McDonnell Douglas,” McDonnell told shareholders. He will retire just before the merger becomes final Aug. 1.

He said the merger represents the “best, even the ideal, solution for the future for our customers, teammates and shareholders. We are surrendering our independence to be part of something greater - a new company that has the potential to become the first and only pre-eminent aerospace company in the history of aviation.”

McDonnell’s brother, company director James S. McDonnell III, was the only major opponent of the merger, saying earlier he would vote his personal shares against the deal to protest Boeing’s unwillingness to include McDonnell Douglas in the corporate name.

The votes came after Boeing satisfied the deal’s most ardent critic - the European Union - with some last-minute concessions, including an offer to scrap exclusive supply contracts with U.S. airlines. The Europeans strongly opposed those deals, saying they shut out Airbus Industrie, the European consortium and Boeing’s only remaining commercial jet competitor.

The EU on Wednesday gave tentative approval to the deal and its antitrust chief said formal acceptance was expected next week. The EU had no power to block the merger but could have excluded the combined company from Europe, raising the specter of a trade war with the United States.

The U.S. Federal Trade Commission sanctioned the merger earlier this month without asking for any changes.

The EU’s objections didn’t sit well with some shareholders, who said the Europeans should have stayed out of a U.S. business matter.

“I’m a World War II veteran,” Joseph Fortier of Tacoma told Condit during a question period. “Those white crosses over in Europe, they better look at them and realize what we’ve done for them.”

The companies plan to begin combined operations Aug. 4, and executives say the next six months will bring a crush of decisions, including the future of McDonnell Douglas’ struggling commercial jet business.

Condit said some Douglas aircraft workers may be headed to Seattle from the commercial jet factory in Long Beach, Calif., and Boeing will look to avoid duplication in administrative and other areas. But few layoffs are anticipated, as Boeing is boosting jetliner production to record levels and both companies have expanding defense and space work.

The merger blends McDonnell Douglas’ success in fighter aircraft, rocket boosters and other defense work with Boeing’s dominance of the commercial jet market.

The new company will have about 223,000 employees in 27 states, primarily Washington, Missouri, California, Kansas, Pennsylvania and Alabama, with estimated revenue this year in excess of $48 billion.

It’s the second major acquisition for Boeing in a year that has seen a fundamental realignment of the U.S. defense industry. Last December, just days before the McDonnell Douglas deal was struck, Boeing completed its purchase of the defense and space segments of Rockwell International Inc.

Earlier this month, the two other remaining U.S. competitors in military aircraft, Lockheed-Martin and Northrop Grumman, agreed to merge into a company that will have an estimated 55 percent of the U.S. defense budget. In defense electronics, Boeing and the new LockheedMartin will dominate along with Raytheon, which is acquiring Texas Instruments’ defense and electronics unit, and Hughes Electronics Corp.’s defense business.