David Cameron talks to François Hollande and Angela Merkel about BAE merger

David Cameron has spoken to his counterparts in France and Germany about the proposed £28 billion merger of BAE Systems with European aerospace giant EADS.

The Prime Minister spoke to President Francois Hollande by phone this morning, having discussed the merger with German Chancellor Angela Merkel on Friday evening, said Downing Street.

Although the merger is a commercial deal, the approval of all three governments in London, Paris and Berlin will be needed if it is to go ahead. The British Government holds a "golden share" in defence contractors BAE, which means it can veto any merger or takeover of the company.

BAE has said that the planned tie-up with Airbus owner EADS will form a "world-class" company in its sector, with combined sales of £60 billion and about 220,000 staff. The merged group would employ about 48,000 in the UK alone.

The deal, which will give BAE access to the lucrative civil aviation market, will leave BAE shareholders with 40% of the combined group.

The two companies have until October 10 to finalise terms under Takeover Panel rules, but there was speculation today that they may request an extension to the deadline.

Mr Cameron's official spokesman declined to give details of the PM's discussions with his French and German opposite numbers when he addressed reporters at a regular press briefing in Westminster today.

The spokesman said: "Given the nature of the companies' activities, the Government will clearly have some involvement and we need to ensure that the UK's public interest is properly protected.

"We are working with the companies to ensure that that is the case. We are also talking to people in other countries about this.

"The Prime Minister spoke to Chancellor Merkel on Friday night and has spoken to President Hollande this morning.

"Clearly, the companies have activities in all three countries and you would expect us to stay in close contact on it. We have an interest in ensuring that the UK's interests are properly protected and we will do that."

Mr Cameron has not yet spoken to US President Barack Obama about the merger proposal, said the spokesman. Washington is understood to be taking a close interest in the deal because of BAE's involvement in sensitive US defence projects.

PA