Shares of British Aerospace opened sharply lower today, on news of the unexpectedly low valuation placed on its 20% stake in Airbus. Speculation abounds that BAe shareholders will decline the deal when they vote on it. Such a rejection would add further chaos to Airbus and its parent EADS, which just underwent a management "shake—up" predicated on EADS assuming 100% ownership of Airbus. Fine—sounding plans for "integration" of Airbus into EADS may not work with a minority shareholder owning 20%.

The spectacle promises to continue.

Thomas Lifson   7 3 06