Germany raises doubts about BAE-EADS deal

 

The £30bn mega-merger between the UK defence giant BAE Systems and the European aerospace group EADS faced opposition yesterday from German politicians who warned that getting the go-ahead for the proposed tie-up was not guaranteed.

After Tom Enders, the chief executive of the Airbus owner EADS, appeared before a committee of the German parliament, Germany's Deputy Economy Minister, Hans-Joachim Otto, cautioned that it was not certain the deal would get approved.

"It is about 'if' as well as 'how'," he said, adding that it was "a very complicated plan that throws up advantages and disadvantages, risks and chances".

Kerstin Andreae, a member of Germany's Green Party who is also on the committee, said there were "disagreements" between the government and EADS.

"More questions were left open than answered," she said. "There are disagreements between the government and Tom Enders on the question of the valuation of the golden share which could not be cleared up".

The proposed merger requires approval from Germany, the UK, France and the US. The first three have all been offered golden shares as part of the deal, which would allow them to stand in the way of hostile takeover attempts, although there are fears this could be against European law.

Speaking after his appearance, Mr Enders called for a loosening of government controls. "We want to create a company that is internationally much more successful, that draws new investors," he said, adding that there were "many examples to prove that companies in this sector and of this size should not necessarily be subject to state involvement".

His stance appeared to be supported by Mr Otto, who said that if EADS and BAE did merge the resulting company should be subject to less political influence than had been the case with EADS. BAE also wants France and Germany to give up their right to nominate board members. However, France is believed to be keen to maintain an influence over decision-making.

Mr Enders also sought to draw a line under speculation that EADS investors could end up with more than 60 per cent of the combined entity, arguing that the mooted 60-40 ratio with BAE shareholders was fair. The two companies must unveil detailed proposals for the merger by 10 October, although they could ask the Takeover Panel for a extension.

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