BAE Systems moved to patch up damaged relations with its investors on Thursday, promising imminent meetings to discuss its strategy after the failure of its attempted merger with EADS, shareholders told Reuters on Thursday.
Investors are keen to hear management make its case and explain how Europe's biggest defence contractor plans to keep growing when governments are cutting back on their military spending.
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"We want to sit down with the company to talk through exactly why they wanted to do this deal, and now that it won't be going ahead, what are the plans," said one of BAE's top 20 shareholders.
"They implied this was a strategic necessity, and now they say this setback is fine and that they can carry on as normal. Well, which is it?"
Investors contacted by Reuters after the proposed deal fell through said BAE's management has said it will meet them, possibly within days, to outline its plans.
Earlier this week fund manager Invesco, BAE's biggest shareholder with more than 13 percent of the company, fired a broadside at the company in an attempt to sink the merger, citing concerns over state interference, poor terms and lack of strategic rationale.
But now the deal is off the table many of the investors said they remained supportive of BAE's managers but still expect to see a robust plan for the company's future, and will not settle for pledges to find an alternative suitor, perhaps in the United States as a solution to its immediate challenges.
"They need to be clear now. The last thing you want to hear is they're just going to wait for a better suitor to come over the hill. You want them to be actively managing the business and getting on with the day-to-day business of winning more international contracts," said another leading shareholder.
A number of investors said management were owed a modest amount of credit for engaging EADS in what they saw as an ambitious attempt to fulfill obligations to investors and explore all possible ways of generating value for shareholders.
One major shareholder said he had supported the principle of the merger with the owner of Airbus as an effective way to meet BAE's challenge of diversifying away from its current dependence on the weakening defence sector.
The failure of the deal is therefore an ominous sign for the company, he noted.
"BAE are left in a tricky position ... Consolidation would seem sensible in the face of such difficulties, but as we have seen, this is not going to be easy to achieve," he said.
None of the investors contacted by Reuters demanded an immediate management overhaul following the deal's collapse but indicated that Chief Executive Ian King and Chairman Dick Olver face a tough few weeks in trying to restore their credibility and avoid a vote of no confidence at the next shareholder meeting.
"Until you sit down with the company, you cannot make those kinds of judgments on whether the chairman should stay or go ... So we'll hold fire, talk to the company and then decide how we feel about it," the first investor said.