---
title: "Boeing → McDonnell Douglas"
url: "https://mahouse.world/ma-deals/boeing-buy-mcdonnell-douglas-1996"
type: "M&A deal"
year: "1996"
---

# Boeing → McDonnell Douglas

Boeing's all-share takeover of McDonnell Douglas, worth $13.3bn when agreed in December 1996, left the United States with one maker of large airliners; American regulators cleared it without conditions, while the European Commission first made Boeing drop the exclusivity clauses in its supply deals with three US airlines.

Left the United States with a single large commercial aircraft manufacturer, and drew a conditional clearance from the European Commission.

- **Acquirer:** Boeing (United States)
- **Target:** McDonnell Douglas (United States)
- **Value:** $13.3B
- **Announced:** December 1996
- **Completed:** August 1997
- **Sector:** Industrials
- **Deal type:** merger

## Why it mattered

McDonnell Douglas, formed in 1967 when McDonnell Aircraft merged with the struggling Douglas, built the F-15 and F/A-18 fighters as well as the DC-10, MD-80 and MD-11 airliners. Boeing had just absorbed Rockwell's aerospace and defence units. On 15 December 1996 Phil Condit of Boeing and Harry Stonecipher of McDonnell Douglas announced a stock swap of 0.65 Boeing shares for each McDonnell Douglas share, about $13.3bn, creating what they called the world's largest aerospace company, with about 200,000 employees. Condit would be chairman and chief executive, Stonecipher president and chief operating officer.

On 1 July 1997 the Federal Trade Commission closed its investigation. It accepted that the deal looked troubling on its face — Boeing had roughly 60% of large commercial aircraft sales and only Airbus as a significant rival — but concluded, on the "virtually unanimous" testimony of forty airlines, that McDonnell Douglas "no longer constitutes a meaningful competitive force" in airliners. Brussels went further. To win clearance that month, Boeing agreed not to enforce exclusivity in its 20-year supply deals with American, Delta and Continental, to sign no new exclusive deals until August 2007, to license government-funded patents to rival manufacturers, and to keep Douglas's commercial business as a separate legal entity for ten years. Boeing said the Commission should have deferred to the FTC. The merger took effect on 1 August 1997, valued by then at $16.3bn.

## What it left behind

Boeing wound down its new airliner lines: the MD-11 was ended in 2001 because it competed with the 777, and the MD-95, sold as the Boeing 717, went out of production in 2006 after 155 deliveries. The longer legacy was managerial. McDonnell executives took charge of the combined company and McDonnell's financial management prevailed; Seattle joked that McDonnell Douglas had bought Boeing with Boeing's money. Headquarters moved to Chicago in 2001, and Stonecipher returned as chief executive from 2003 to 2005. After the 737 MAX crashes of 2018 and 2019, a 2020 Quartz report and the 2022 documentary Downfall traced part of the company's troubles to the culture clash the merger began. A deal cleared because the target no longer competes can still transform the buyer: what Boeing absorbed was not market share but a management.

Source: https://boeing.mediaroom.com/1997-07-23-Boeing-McDonnell-Douglas-Merger-Gains-a-Positive-Opinion-from-the-European-Commission