OliWW
FlyBe are getting rid of E45s as fast as they can, replacing them with DH4s and E195s. The last they would want, from a fleet perspective, would be a load more to get shot of. From a commercial perspective, there may be some mileage in buying bmi Regional to gain the slots at MAN, and some business routes out of EMA that would probably make more economic sense flown by DH4s than thirsty old generation 737s that are also too big for the job.
As for buying Baby - why? Flybe's core business is now the thinner leisure routes, plus business routes domestically in UK and western Europe. Baby's is pretty well all bucket and spade, and weekend breaks - their frequency on what could called business routes (LIS, MAD, BCN) is not high enough to make them appealing to the business market.
Personally, I can't see why LH wouldn't want to look seriously at putting Baby in with Germanwings (under one management) but perhaps retaining the two companies as separate brands a'la TUI with it's various operations outside Germany.
As another poster said, all this is little more than rumour and speculation. When LH make their minds up the last to know will be the folks whose employment will be most directly effected - thats how it works these days.