Proposed Merger

BRITISH AEROSPACE PLC
11 October 1999


    Not for release, publication or distribution in or into
                  Canada, Australia or Japan


           BRITISH AEROSPACE PUBLIC LIMITED COMPANY
                               
     PROPOSED MERGER OF BRITISH AEROSPACE WITH THE MARCONI
                  ELECTRONIC SYSTEMS BUSINESS
   CREATION OF A WORLD-CLASS AEROSPACE AND DEFENCE BUSINESS


British Aerospace announces that formal documentation relating
to the proposed merger with the Marconi Electronic Systems
business of GEC (the 'MES Business') is expected to be posted
to shareholders of British Aerospace today.  The documents
include the following:

*    details of the proposed Merger and an update on its
     financial effects;

*    details of the specific undertakings sought by the
     Secretary of State for Trade and Industry and updates on
     the status of the US anti-trust clearance process;

*    a notice to British Aerospace ordinary shareholders
     convening an Extraordinary General Meeting of British
     Aerospace for 9.30 a.m. on 8 November 1999 to approve the
     Merger; and

*    further details of the expected timetable for the Merger,
     including an indicative date for Completion at the end of
     November 1999.

The Proposed Merger

On 19 January 1999, the Board announced that it had reached
agreement with GEC on the principal terms of a proposed
reconstruction, under which GEC will separate the MES Business
from the rest of its business, and the merger of the MES
Business with British Aerospace. The Merger will be a major
step in progressing British Aerospace's strategy and vision of
creating a competitive global aerospace and defence company.

The MES Business is an international business with leading
positions in avionics, electro-optics, naval and underwater
systems, naval prime contracting and shipbuilding (surface
ships and submarines) and defence systems together with joint
ventures in radar and defence systems, missile systems, ground
and naval systems, air traffic control, sonar and space.
Further details of the MES Business are included in Appendix 1
and historical financial information on the MES Business is
set out in Appendix 2.

The combination of British Aerospace and the MES Business will
create the third largest aerospace and defence company in the
world in terms of group turnover with leading-edge technology
to meet the increasing complexity of customer requirements.

The Merger is expected to provide the Enlarged Group with
increased growth potential both through a significant presence
in nine 'home' markets and by allowing the pursuit of a
unified approach in marketing to export markets.

Pursuant to the Merger, GEC ordinary shareholders will be
entitled to receive approximately 1.17 billion new British
Aerospace ordinary shares and CALS, which will pay £440
million (pre-tax) of principal and interest over four years.
Further details of the terms of the CALS are set out in
Appendix 3. It is intended that, on Completion, the MES
Business will have net tangible liabilities of approximately
£0.9 billion (subject to adjustment).  Based upon the 31 March
1999 balance sheet of the MES Business, this would result in
pro forma net debt of £1.45 billion in the MES Business.

Financial Effects

At the time of the announcement of the Merger in January 1999,
annual pre-tax cost savings were anticipated to be in excess
of £275 million (including £25 million representing the
Enlarged Group's share of cost savings in joint ventures)
within three full financial years of completion of the
Transactions (year ending 31 December 2002).  It was also
anticipated that Completion would be in Summer 1999.

As a consequence of the delay in Completion, which has arisen
from the extended regulatory clearance process, the Board has
had an opportunity to revalidate the extent and phasing of the
anticipated cost savings, and to commence the necessary
planning for the integration of the British Aerospace Group
and the MES Business.  That validation process has confirmed
confidence that, assuming Completion occurs at the end of
November 1999, in excess of £275 million of cost savings can
be achieved by the year ending 31 December 2002.  The Board
expects approximately £55 million of cost savings to be
achieved in the year ending 31 December 2000 on the basis that
the indicative timetable is achieved, with £150 million to be
achieved in the following year.

The Board also expects that the Merger will enhance fully
diluted earnings per share before goodwill amortisation and
exceptional items by more than 10 per cent. in the third full
financial year following Completion.  As a result of the delay
in obtaining regulatory clearance and the consequent delay in
the delivery of the cost savings, the Board expects that there
will be some modest dilution to fully diluted earnings per
share in the financial year ending 31 December 2000 before
goodwill amortisation and exceptional items.

Any delay in Completion beyond the end of November 1999,
whilst not affecting the total amount of the cost savings nor
the absolute period of time needed for the cost savings to be
achieved, may have an impact on the precise accounting period
in which the cost savings will accrue.

The validation process also confirms that the non-recurring
pre-tax cost of achieving these cost savings is expected to be
approximately £200 million over the same three year period.

The Merger will be accounted for as an acquisition under UK
GAAP, leading to pro forma goodwill on consolidation of
approximately £6.2 billion. It is anticipated that this amount
will be written off over a period of 20 years, resulting in an
estimated annual amortisation charge of approximately £310
million.

The figures in this section on financial effects (other than
earnings per share) and the previous section on the proposed
Merger (relating to net tangible liabilities and pro forma net
debt) are derived from the pro forma statement of net assets
of the Enlarged Group set out in Part IV of the Listing
Particulars.

Regulatory clearances

UK anti-trust clearance to the Merger is likely to be granted
subject to agreement of certain requested undertakings being
given by British Aerospace.  The directors of British
Aerospace are confident that agreement will be reached on the
specific terms of the undertakings requested by the Secretary
of State for Trade and Industry.  Although the actual effect
of the proposed undertakings will not be known until they are
finally agreed, in the opinion of the Board, the undertakings
are not expected to compromise the delivery of synergies
resulting from the Merger.

US anti-trust clearance has not yet been granted.  It is not
possible to complete the Merger without the agreement of the
US Department of Justice.  While the Company is continuing its
discussions with all relevant US authorities, there may be a
delay in the date of Completion indicated in the timetable set
out below.

Process to Completion

British Aerospace is today posting to its shareholders the
Listing Particulars for the new British Aerospace ordinary
shares and the Capital Amortising Loan Stock and a Circular
including a recommendation by the Board to vote in favour of
the resolutions to be proposed at the Extraordinary General
Meeting of British Aerospace convened for 9.30 a.m. on Monday,
8 November 1999.

GEC is today posting to its shareholders the British Aerospace
Listing Particulars and other documents in connection with the
Transactions.

The indicative timetable for the proposed Merger is as
follows:

                                                          1999
                                                              
Deadline for receipt of forms                     9.30 a.m. on
of proxy for British Aerospace            Saturday, 6 November
Extraordinary General Meeting
in connection with the Merger
                                                              
British Aerospace Extraordinary                   9.30 a.m. on
General Meeting in connection               Monday, 8 November
with the Merger
                                                              
Indicative date for completion             Monday, 29 November
of the Merger(1)
                                                              
Indicative date for                       Tuesday, 30 November
commencement of dealings in the
new British Aerospace ordinary
shares and CALS(1)

Note:

(1)  It is unlikely that Completion will occur any sooner than
     is indicated above, but it may not occur or may occur
     later.  In particular, it is conditional upon a number of
     matters, including US regulatory clearance.


Nothing in this announcement should be construed as a profit
forecast or be interpreted to mean that the future earnings
per share of the Enlarged Group will necessarily be the same
as, or greater than, the pro forma earnings per share of
British Aerospace for completed financial periods.

Enquiries:

British Aerospace                               01252 373 232
Locksley Ryan
Andrew Wrathall

Dresdner Kleinwort Benson                       0171 623 8000
Tim Shacklock

Goldman Sachs                                   0171 774 1000
Simon Robertson
Simon Dingemans

Dresdner Kleinwort Benson and Goldman Sachs, which are
regulated in the UK by The Securities and Futures Authority
Limited, are acting for British Aerospace in connection with
the Transactions and for no-one else and will not be
responsible to anyone other than British Aerospace for
providing the protections afforded to customers of Dresdner
Kleinwort Benson and Goldman Sachs or for giving advice in
relation to the Transactions.

This announcement does not constitute, or form part of, an
offer or any solicitation of an offer for securities.

Neither this document nor any copy of it may be taken,
transmitted or distributed, directly or indirectly, into
Canada, Australia or Japan.  Any failure to comply with this
restriction may constitute a violation of Canadian, Australian
or Japanese securities laws.

None of the British Aerospace new ordinary shares, the CALS
nor any other securities proposed to be issued in connection
with the Transactions will be registered under the US
Securities Act of 1933 or under the securities laws of any
state of the United States and they may not be offered or sold
in the United States absent registration under the US
Securities Act of 1933 or an exemption from registration.
This announcement is not an offer of any such securities for
sale in the United States or elsewhere.




                          Appendix 1
                               
                       The MES Business


The MES Business is GEC's international aerospace, naval
shipbuilding, defence electronics and defence systems
business.  It has leading positions in avionics, electro-
optics, naval and underwater systems, naval prime contracting
and shipbuilding (surface ships and submarines) and defence
systems together with joint ventures in radar and defence
systems, missile systems, ground and naval systems, air
traffic control, sonar and space. The MES Business'
capabilities, particularly in system-of-systems applications,
were strengthened in 1998 with the acquisition of Tracor Inc.
for approximately US$1.4 billion, which enhanced the market
presence of the MES Business in the US.  The main activities
of the MES Business include:

*    advanced airborne radar systems and mission avionics on
     military projects, including Eurofighter Typhoon and
     Joint Strike Fighter development, and for civil aviation;
*    missiles, air defence and naval radars, command and
     information systems for air, land and sea;
*    infra-red sensors, airborne communication, navigation and
     electro-optic systems;
*    naval prime contracting, shipbuilding (surface ships and
     submarines), land and naval armament systems, underwater
     systems and naval support services;
*    sonar systems for ships, submarines and aircraft; and
*    space systems, including satellites and ground stations.

The principal activities of the MES Business are shown below:

The Marconi Avionics division with turnover of £847 million
(for the year ended 31 March 1999) combines prime
contractorship and systems integration with the production of
airborne radars, head-up and helmet mounted displays, air data
computers, cockpit systems, flight controls, airborne
communications, electro-optic and electronic warfare
equipment.

Its activities cover the design and manufacture of electronic
and electro-optic devices, modules, subsystems and systems
with a range of defence applications including airborne
targeting and navigation systems, electro-optic seekers,
missile guidance, smart munitions, thermal imaging and data
links.  Marconi Avionics products include infra-red cameras
and night vision image intensifiers.  Marconi Avionics also
provides through-life support to all its products covering
spares and repairs, technical documentation and technical
support.

The Marconi Naval Systems division with turnover of £594
million (for the year ended 31 March 1999) is a prime
contractor for major programmes covering surface ships,
submarines, underwater systems, land and naval systems and
weapons.  Marconi Naval Systems comprises prime contracting
organisations; Marconi Marine; Underwater Systems; Land and
Naval Systems and Naval Support Systems.  It has resources for
naval construction; maintenance, repair and training
activities in high technology underwater weapons; artillery,
naval weapon systems and armoured fighting vehicle systems
integration.

The Marconi North America division with turnover of £1,163
million (for the year ended 31 March 1999 including Tracor
Inc. for the period of forty weeks from its acquisition by the
MES Business in June 1998) designs, develops, manufactures,
sells and supports a range of products and intelligent
electronic systems in the following areas:

*    Information Systems:  Mission management and strategic
     war planning systems; imagery; mapping systems; test and
     space systems; information services; training and
     facilities management;
*    Communications and Data Links:  Wide band, spread
     spectrum and Link 16 tactical data links, including JTIDS
     and MIDS and integration of C3I systems;
*    Combat Systems:  Electronic identification systems, infra-
     red imaging, mine counter measures, camouflage systems
     and 'signature' management coatings, and mobile
     operations towers;
*    Electronic Warfare Defence Aids:  Electronic jammer and
     acoustic counter measures, decoys, dispensing systems and
     radar warning receivers;
*    Avionics and Navigation:  Precision landing systems,
     Doppler, GPS and inertial navigation systems, flight
     management systems, display systems (HUD, helmet and
     cockpit) information processing and space electronics;
*    Aeronautic Products:  Military and civil flight control,
     avionics and vehicle management systems, actuators and
     fuel systems, unmanned aerial vehicles and targets,
     aircraft modification and maintenance, aerostructures and
     assemblies; and
*    System Technical Support:  Integration of ship combat
     systems; command, control and communications engineering
     and range systems and support.

Alenia Marconi Systems NV ('AMS') with turnover of £136
million (for the period from 23 December 1998 to 31 March
1999) is a joint venture company owned equally by the MES
Business and Finmeccanica S.p.A.  Its principal activities
include the design, development and manufacture and through-
life support of:

*    air-to-surface,  anti-ship and  surface-to-air  missiles,
     integrated  missile  systems,  precision  munitions   and
     seeker systems;
*    land-based  and ship-borne radar systems for  both  civil
     and  military  applications covering  air  defence,  long
     range  surveillance, multifunction radar and missile  and
     gun fire control systems;
*    air  traffic  control  radar and integrated  air  traffic
     management centres; and
*    sophisticated  synthetic environment  based  systems  for
     simulation and training and whole system modelling.

AMS provides the exploitation of these systems and sub-systems
through its design and integration capabilities in C3I
systems.  These include total combat system integration and
application of digital battlespace systems.

Matra Marconi Space NV ('MMS') with turnover of £432 million
(for the year ended 31 March 1999) is a joint venture between
Aerospatiale Matra of France and the MES Business which, it
has been agreed, will be held as to 50 per cent. by each
party.  MMS has two operating subsidiaries - Matra Marconi
Space UK Limited and Matra Marconi Space France SA.  It
designs and manufactures satellites and spacecraft sub-systems
for communications, remote sensing and scientific applications
together with earth stations (civil and military), launcher
and orbital infrastructures and ground support and control
facilities.  MMS's product directory encompasses the following
range of space engineering activities: prime contractorship,
systems studies, assembly; integration and test, design,
development and manufacture of space craft systems and
launcher systems - including payloads, structures, thermal
control, power, propulsion, navigation and guidance control,
telemetry and command mechanisms and data handling; design,
development and manufacture of ground control and user
systems, civil and military earth stations (fixed, mobile,
portable and airborne).

Thomson Marconi Sonar NV ('TMS') with turnover of £134 million
(for the year ended 31 March 1999) is a joint venture between
Thomson-CSF (50.1 per cent.) and the MES Business (49.9 per
cent.).  TMS operates through three established companies:
Thomson Marconi Sonar Limited in the UK; Thomson Marconi Sonar
Pty Limited in Australia and Thomson Marconi Sonar SAS in
France.  TMS is a sonar system supplier for surface ships,
submarines, aircraft and naval anti-mine warfare.

The turnover of the MES Business for the year ended 31 March
1999 also includes £260 million for those parts of the MES
Business transferred into the AMS joint venture (covering the
period up to 23 December 1998), £71 million for other
businesses and, upon aggregation, excludes £102 million for
intra-MES Business divisional trading.  The turnover figures
of the joint ventures above represent the share of the MES
Business of the relevant joint venture's total turnover.


Note:A glossary of technical terms is included in the Listing
     Particulars.

                          Appendix 2
                               
      Financial information relating to the MES Business

The following information is based on the aggregated financial
information for the MES Business extracted from the
accountants' report disclosed in the Listing Particulars. The
summary financial information below should be read in
conjunction with the whole of the Circular and the Listing
Particulars.

Aggregated profit and loss account (extract)
Year ended 31 March
                                          1999   1998   1997   
                                            £m     £m     £m
Turnover                                                       
Group turnover                                                 
- Continuing operations                  2,207  2,435  2,183   
- Acquisitions                             594      -     67   
                                         -----  -----  -----   
                                         2,801  2,435  2,250   
Share of joint ventures                    734    568    626   
                                         -----  -----  -----   
                                         3,535  3,003  2,876   
                                         -----  -----  -----   
Operating profit                                               
Group operating profit                                         
- Continuing operations                    307    299    248   
- Acquisitions                              26      -      7   
- Exceptional items                       (35)   (33)   (33)   
                                         -----  -----  -----   
                                           298    266    222   
Share of joint ventures                                        
- Excluding share of exceptional items      63     36     35   
- Share of exceptional items               (8)      -      -   
                                         -----  -----  -----   
                                            55     36     35   
Associates                                   2      1      1   
                                         -----  -----  -----   
Operating profit                           355    303    258   
Exceptional items, gains less losses on                        
disposals of subsidiaries and other                         
fixed assets                                 -     41      -
Income from loans, deposits and                                
investments, less interest payable       -----  -----  -------
Group                                    I  12     12     16 I
Share of joint ventures                  I   2      4      4 I
                                         -----  -----  -------
                                            14     16     20   
Profit on ordinary activities before                         
taxation                                                     
- Excluding exceptional items and        -----  -----  -------
goodwill amortisation                    I 448    352    311 I
- Exceptional items and goodwill         I                   I
amortisation                             I(79)      8   (33) I
                                         -----  -----  -------
                                           369    360    278 
Tax on profit on ordinary activities      ( 75)   (79)   (53)   
                                         -----  -----  -----   
Profit on ordinary activities after                            
taxation                                   294    281    225
Minority interests                         (5)    (6)    (3)   
                                         -----  -----  -----   
Profit on ordinary activities                                  
attributable to the shareholders           289    275    222
Distribution to GEC                      (384)  (147)  (242)   
                                         -----  -----  -----   
Retained (loss)/profit for the                                 
financial year                            (95)    128   (20)
                                         -----  -----  -----   

Notes:
1.   The historical capital structure of the MES Business will
     not reflect the future capital structure under British
     Aerospace ownership and future interest, management
     charges, taxation and distributions may be significantly
     different from the historical amounts that arose under
     GEC ownership.
2.   For the purposes of this Appendix 2, 'Group' means the
     MES Business excluding its joint ventures.




                          Appendix 3
                               
                   Summary terms of the CALS

The Capital Amortising Loan Stock was created by a resolution
of the Board passed on 29 September 1999 and a resolution of a
duly authorised committee of the Board passed on 6 October
1999 and will be constituted by a trust deed (the 'Trust
Deed') to be entered into between the Company, The Chase
Manhattan Bank (the 'Trustee') as trustee for the holders of
the CALS (the 'Stockholders') and Lloyds TSB Registrars
('Lloyds') as registrar and paying agent.

The Trust Deed will be qualified under the US Trust Indenture
Act of 1939, as amended.

The Trust Deed will not contain any restriction on borrowing
or the disposal of assets but will contain, inter alia,
provisions to the following effect:

1.   Interest

The CALS will carry interest at the rate of 7.45 per cent. per
annum on the principal amount outstanding from time to time
payable (less any tax required by law to be deducted) by
yearly instalments on the anniversary of the date of issue in
each year, the first payment of interest to be made on the
first anniversary of the date of issue and to amount to a full
year's interest (less any tax required by law to be deducted).

2.   Redemption and Purchase

2.1  On the anniversary of the date of the issue of the CALS
     in each year, the Company will redeem a proportion of the
     original principal amount of each holding of the CALS
     (the 'Original Principal Amount') at par, together with
     accrued interest (less any tax required by law to be
     deducted from the payment), as follows:

     -    on  the  first  anniversary of the  date  of  issue,
          22.373 per cent. of the Original Principal Amount;
     -    on  the  second  anniversary of the date  of  issue,
          24.040 per cent. of the Original Principal Amount;
     -    on  the  third  anniversary of the  date  of  issue,
          25.831  per cent. of the Original Principal  Amount;
          and
     -    on  the fourth anniversary of the date of issue, the
          balance of the Original Principal Amount.

     On each of the above dates a holder of CALS will
     therefore receive a payment made up partly of interest
     and partly of redemption monies.
     
     The amount of the Original Principal Amount to be
     redeemed in each year shall, if not an integral multiple
     of £1, be rounded down to the nearest whole number of
     pounds.

2.2  The Company is not entitled to redeem the CALS early,
     although the CALS may become immediately due and
     repayable on a date other than that specified in section
     2.1 above on the happening of an event of default.

2.3  The Company may at any time purchase CALS at any price in
     the market or by private treaty, except that (a) in the
     case of a purchase by tender, tenders will be available
     to all Stockholders alike and (b) if the Capital
     Amortising Loan Stock is then listed on the London Stock
     Exchange such purchases shall comply with the rules for
     the time being of the London Stock Exchange.

2.4  Any CALS purchased by the Company or redeemed will be
     cancelled and will not be available for re-issue.  Any
     CALS purchased by any subsidiary may be retained or
     resold but, whilst held by such subsidiary, will not
     entitle the holder to vote at, or to be counted in the
     quorum for, any meeting of Stockholders and for the
     purposes of the provisions contained in the Trust Deed
     concerning meetings of Stockholders will not be regarded
     as being in issue.

3.   Listing and Transfer

The Company will use its best endeavours to obtain and, so
long as any of the Capital Amortising Loan Stock remains
outstanding, maintain a listing for the CALS on the London
Stock Exchange.

The CALS will be in registered form, are capable of being held
in uncertificated form and will be freely transferable in
amounts and multiples of £1 nominal.

4.   Governing Law

The Trust Deed shall be governed by and construed in
accordance with English law.  However, the immunities,
liability and duty of care of the Trustee under the Trust Deed
shall be governed by and construed in accordance with the laws
of the State of New York.

                          Appendix 4
                               
                          Definitions

The following definitions apply throughout this document,
unless the context requires otherwise:

'Board'                         the board of British Aerospace
                                
                                
'British Aerospace' or the      British Aerospace Public
'Company'                       Limited Company
                                
'British Aerospace Group'       British Aerospace and its
                                subsidiary undertakings
                                
'CALS' or 'Capital Amortising   £368,839,202 7.45 per cent.
Loan Stock'                     Unsecured Capital Amortising
                                Loan Stock 2000/2003 of
                                British Aerospace, to be
                                issued in consideration for
                                the acquisition of the MES
                                Business
                                
'Circular'                      the document, dated 11 October
                                1999, addressed, inter alia,
                                to British Aerospace ordinary
                                shareholders setting out
                                details of the Merger and
                                containing a notice convening
                                the British Aerospace
                                Extraordinary General Meeting
                                in connection with the Merger
                                
'Completion'                    completion of the Merger
                                
'Dresdner Kleinwort Benson'     Kleinwort Benson Limited
                                
'Enlarged Group'                the British Aerospace Group
                                following the Merger
                                
'GEC'                           The General Electric Company,
                                p.l.c
                                
'GEC Group'                     GEC and its subsidiary
                                undertakings
                                
'GEC Reorganisation'            the proposed reorganisation of
                                the GEC Group to separate the
                                MES Business from the rest of
                                GEC's businesses, assets and
                                liabilities prior to the
                                Merger
                                
'Goldman Sachs'                 Goldman Sachs International
                                
'Listing Particulars'           the document, dated 11 October
                                1999, comprising listing
                                particulars relating to
                                British Aerospace
                                
'Marconi'                       Marconi plc, which, after
                                Completion, will hold,
                                directly or indirectly, all
                                the businesses, assets and
                                liabilities of the GEC Group
                                other than the MES Business
                                
'Merger'                        the proposed merger of British
                                Aerospace and the MES Business
                                details of which are set out
                                in the Listing Particulars
                                
'Transactions'                  the GEC Reorganisation and the
                                Merger