McDonnell Douglas & Boeing To Merge -- Press Release Text

From:         hrose@rocza.kei.com (Helen Trillian Rose)
Date:         15 Dec 1996 17:58:10 GMT
Organization: Case Western Reserve University School of Law
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McDonnell Douglas to Merge with Boeing

Combination to be world's largest aerospace company

WASHINGTON, D.C., December 15, 1996 - Phil Condit, president and chief
executive officer of The Boeing Company (NYSE : BA), and Harry
Stonecipher, president and chief executive officer of McDonnell Douglas
Corporation (NYSE : MD), jointly announced today that the companies have
signed a definitive agreement whereby McDonnell Douglas will merge with
Boeing in a stock-for-stock transaction.

Under the terms of the transaction, McDonnell Douglas shareholders will
receive 0.65 shares of Boeing common stock for each share of McDonnell
Douglas common stock. Based on the closing price of Boeing stock (96 3/4)
on Dec. 13, 1996, the deal is estimated to be worth approximately $13.3
billion. The transaction is subject to approval by the shareholders of
both companies and certain regulatory agencies, and is expected to close
as early as mid-1997.

The combined company will have about 200,000 employees, which includes the
recent merger of Rockwell aerospace and defense units into Boeing North
American. It will operate in 27 states with estimated 1997 revenues in
excess of $48 billion, making it the largest integrated aerospace company
in the world. The company will operate in three major locations: the Puget
Sound area of Washington state; St. Louis, Mo.; and Southern
California. The Boeing Company headquarters will remain in Seattle.

A combined transition team will be formed within the next few days to
prepare for the integration of the operations of the two companies after
the merger.

Condit noted the rich history of both companies and said, "Today's
announcement brings together two strong aerospace companies with
complementary capabilities. The merger enhances our position as the number
one aerospace company in the world and truly among the world's premier
industrial firms."

Stonecipher said, "This transaction puts together a focused, broad-based
aerospace company with extraordinary capabilities in commercial and
military aircraft, and defense and space systems.

The combined companies will offer an outstanding balance of current
production programs and those scheduled for production in the years ahead,
in addition to manned space programs and space transportation programs."

Following the close of the transaction, Condit will be chairman and chief
executive officer and Stonecipher will be president and chief operating
officer of the company. Two-thirds of a newly constituted board of
directors will be drawn from the current board members of Boeing and one
third of the members will be drawn from the current McDonnell Douglas
board.

While the company expects substantial cost savings, Condit said there are
significant growth opportunities in all three business segments as
well. He said, "The merger strengthens our competitive position for the
Joint Strike Fighter, it improves our position in space transportation,
and it enhances our ability to provide the best products and services to
our airline customers."

"This is great news for the airline industry, for our nation's defense
programs, and for space programs worldwide. The strength of our people,
and that of our infrastructure and financial position, will benefit our
customers and shareholders, and position us to meet the global aerospace
needs for the 21st century," Condit said.

CS First Boston is representing The Boeing Company, and JP Morgan has been
advising McDonnell Douglas.