James Moore: Sorry Dick – despite what you say, the in-laws just don't like this marriage
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Friday 21 September 2012
Outlook The stock response by BAE Systems' chairman, Dick Olver, to just about any of the increasing number of awkward questions which have been raised about his ambitions to merge the company with EADS is that it's a great deal, trust us.
Don't worry about job losses, there's very little overlap between the two. Don't worry about who will be holding the whip hand over the, erm, Franco, German, Anglo, Spanish, Dutch hotchpotch, it'll be the customers (and the jobs will follow them).
Don't worry about where the corporate headquarters and the natural centre of gravity of the business is, we haven't yet decided. But the civil business will be headquartered in Toulouse (for now) and the defence business in London (for now). The corporate headquarters will effectively be in an Airbus we'll be dusting down to ferry the executive committee around, because the nature of a truly global business like this means they'll be spending most of their lives in the air (but expect the corporate hq to be nominally in Toulouse anyway, even if it doesn't matter, which it does).
The problem with any deal like this is you can only work out whether the baubles promised by the architects are made of fools' gold or the real thing after five years or so. Five years ago (give or take) BAE pulled out of EADS and Airbus, and its shares shot up. But the world has changed, says Mr Olver, and now combining a civil aerospace business with defence looks like a great deal.
Except it doesn't. EADS wants the deal (or at least its executives do) because it hopes to rid itself of its political entanglements. BAE needs it because the defence market has been shrinking, because its shareholders are starting to ask awkward questions about where it is going, and because it's just possible that its preferred partner (Rolls-Royce anyone?) jilted it.
Trouble is, relationships begun on the rebound rarely end well. And Mr Olver has serious problems with the in-laws. This may be a "great deal" for BAE; EADS's chief executive, Tom Enders, may even manage to convince his masters in Paris that it's a great deal for them and that they'll still be able to exercise informal influence over the combined entity without a seat on the board
But President Barack Obama is another matter entirely. Mr Olver can talk about special security arrangements that prevent executives with dual nationalities from looking at propellers in Barrow (or in Baltimore) until he's blue in the face. That won't stop the Republicans from accusing Mr Obama of selling out the US military to the French if they feel in need of scoring a cheap point or two.
And what about Angela Merkel? Her political rivals are bound to cry foul at the prospect of the German part of the Franco-German EADS being vapourised in the untidy melange of the new company. German unions are already fuming.
They won't be inclined to take much on trust and talk of the deal's greatness won't be enough to convince them. One might ask why the British Government should be any different.
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