EADS ‘will ditch’ BAE deal over government demands

Aerospace giant is ready to walk away from merger if France and Germany don’t give ground

Mark Leftly
Saturday 06 October 2012 17:47

Aerospace giant EADS is preparing to dump its audacious, £30bn merger with British defence group BAE Systems if European governments fail to lower their demands over the next three days.

Sources close to EADS said the governments, who effectively control the Airbus-maker, need to make “significant progress” in their negotiations to avoid the deal falling apart.

There were reports of a row between Britain and France jeopardising the deal on Friday.

Advisers are understood to have told EADS boss Tom Enders that there is little point extending Wednesday’s Takeover Panel deadline for the companies to come up with agreed terms unless politicians start ceding ground.

Mr Enders is understood to want to avoid upsetting staff any longer than is necessary– the companies have more than 50,000 employees in the UK alone – through the uncertainty surrounding the talks. Even if strides are made, it is unlikely that EADS and BAE can hit the initial deadline and will have to ask the panel for extra time.

The companies broadly agree over the terms of the deal, which would see BAE investors own 40 per cent of the merged entity and EADS shareholders hold the balance.

The Government, which holds a golden share in BAE allowing it to veto a foreign takeover, is persuaded that the deal would save jobs and create a submarines-to-satellites group big enough to take on Boeing. EADS’s rationale for the deal is to rid the group of the state interference which has caused difficulties in expanding into new markets and appointing senior directors.

Rather than directly or indirectly owning shares in EADS, Mr Enders wants France and Germany to follow the UK’s lead in BAE by all three just having golden shares in the merged group.

However, France wants to retain a strong equity stake, Berlin wants parity with Paris, and Britain doesn’t want any one state owning too much of the company.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies


Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in