MoD's Trident fears spark pledge by BAE

Amid fears over what BAE Systems' planned mega-merger with EADS would mean for Trident, the defence giant is understood to be prepared to ring-fence the nuclear submarine programme if the £30bn deal goes ahead.

After it emerged that the Ministry of Defence has demanded guarantees over Trident, a source close to the company said the ring-fencing of the BAE-built program in Cumbria would be a priority.

While Trident – alongside its cyber security arm Detica – is believed to be one of a number of issues the coalition is concerned over, BAE has been piling the pressure on the government. The Independent on Sunday revealed it has been privately warning a collapse of the merger with the owner of Airbus would result in thousands of job losses in this country.

The proposed merger, which would result in the world's largest defence and aerospace group, is likely to have major political repercussions for a number of countries.

Britain holds a 'golden share' in BAE, meaning it is able to stand in the way of foreign shareholders taking control of 15 per cent or more, while both France and Germany have a 22.5 per cent stake in aerospace giant EADS.

While BAE is understood to be confident it will get the go-ahead from governments, reports from Germany yesterday claimed the deal could fall foul of European law. The issue is the plan to issue 'golden shares' to the British, French and German governments, according to Spiegel.

When news of the potential merger emerged last week, shares in BAE initially shot up 7 per cent before falling back amid some fears that the proposed deal could be valuing the comp-any too cheaply. Espirito Santo Investment Bank claimed the talks "highlight the cheap valuation of BAE".

In Paris, EADS' share price has fallen sharply since the announcement.

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