UK will vet BAe-Marconi merger

THE GOVERNMENT has won its battle with Brussels to vet the pounds 7.3bn merger between British Aerospace and GEC's Marconi defence business.

Stephen Byers, Secretary of State for Trade and Industry, is expected to announce shortly that the deal will be examined by the UK competition authorities and not the European Commission's mergers taskforce.

The decision will anger the French and Germans, who lobbied hard for the deal to be vetted in Brussels. Although the EC competition authorities will still have the power to examine the civil aspects of the merger, these are comparatively insignificant.

The decision by BAe and Marconi to opt for a "British solution" to defence restructuring ended merger talks between BAe and DaimlerChrysler Aerospace (Dasa) of Germany and quashed hopes of an electronics merger between GEC and Thomson-CSF of France.

Jurgen Schrempp, Dasa chairman, has since warned that the BAe-Marconi deal has killed any chance of creating a single European aerospace and defence company.

The UK's success in wresting the merger from Brussels means that it will be examined by the Office of Fair Trading, which will submit a recommendation to ministers after a six-week investigation.

Senior BAe and GEC executives remain confident the deal will avoid a referral to the new Competition Commission and believe it could be approved by the summer.

Under its terms deal shareholders will receive 1.17 billion BAe shares, giving them a 37 per cent stake in the enlarged company. BAE will take on pounds 1.55bn of debt and pay GEC a further pounds 440m in loan stock.

The merger will create the biggest defence contractor in Europe and the third-largest in the world, with combined sales of $20bn (pounds 12.3bn) and could produce pounds 275m of savings a year. The cost of implementing the merger will be around pounds 200m.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border