Merger of EADS, BAE down to wire
Source: Agencies |
October 9, 2012, Tuesday
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Print Edition
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BRITAIN, France and Germany resumed talks yesterday to try to prevent a disagreement over state shareholdings wrecking a proposed merger of EADS and BAE Systems.
With just over two days until a Wednesday deadline set by the UK, the aim is to make sufficient progress over the central issue dogging the talks to allow BAE Chief Executive Ian King and Tom Enders of Franco-German EADS to seek an extension.
BAE's top investor questioned the very rationale of the US$45 billion deal. Plans by Airbus parent EADS and UK arms firm BAE Systems to create the world's largest aerospace and defense company must overcome a knot of political concerns over security and jobs.
"If they can get the central issue of shareholding resolved, then there'll probably be some more time to tie up other issues like headquarters, weights on the board and other matters," said a senior diplomat following the negotiations.
"Otherwise, Enders and King have signaled they will pull the plug on the 10th."
Officials failed to resolve incompatible demands over state involvement in a video conference on Friday. EADS and BAE denied German reports that the talks had collapsed.
There were few signs of progress after private contacts on the weekend. Plans have already been drawn up to request extra negotiating time, but the companies are unwilling to release pressure by deploying them until they have some real political progress to show UK regulators, banking sources said.
People close to the talks said the UK appeared most open to the deal, Germany was the least keen and France wanted more time to think it over. Yet as problems pile up, all sides have moved to deflect the responsibility in case the talks break down.
Industry experts say it is too early to say whether the world's largest defense merger will happen but note the parties are used to negotiating down to the wire or even beyond.
EADS was created from a merger in 2000 only after talks between France and Germany broke down and the plan collapsed, bringing the two sides back together to negotiate a complex shareholder pact limiting the role of the French state.
BAE's top shareholder Invesco Perpetual blasted the proposed deal on Monday, citing state interference, poor terms and a lack of strategic rationale.
With just over two days until a Wednesday deadline set by the UK, the aim is to make sufficient progress over the central issue dogging the talks to allow BAE Chief Executive Ian King and Tom Enders of Franco-German EADS to seek an extension.
BAE's top investor questioned the very rationale of the US$45 billion deal. Plans by Airbus parent EADS and UK arms firm BAE Systems to create the world's largest aerospace and defense company must overcome a knot of political concerns over security and jobs.
"If they can get the central issue of shareholding resolved, then there'll probably be some more time to tie up other issues like headquarters, weights on the board and other matters," said a senior diplomat following the negotiations.
"Otherwise, Enders and King have signaled they will pull the plug on the 10th."
Officials failed to resolve incompatible demands over state involvement in a video conference on Friday. EADS and BAE denied German reports that the talks had collapsed.
There were few signs of progress after private contacts on the weekend. Plans have already been drawn up to request extra negotiating time, but the companies are unwilling to release pressure by deploying them until they have some real political progress to show UK regulators, banking sources said.
People close to the talks said the UK appeared most open to the deal, Germany was the least keen and France wanted more time to think it over. Yet as problems pile up, all sides have moved to deflect the responsibility in case the talks break down.
Industry experts say it is too early to say whether the world's largest defense merger will happen but note the parties are used to negotiating down to the wire or even beyond.
EADS was created from a merger in 2000 only after talks between France and Germany broke down and the plan collapsed, bringing the two sides back together to negotiate a complex shareholder pact limiting the role of the French state.
BAE's top shareholder Invesco Perpetual blasted the proposed deal on Monday, citing state interference, poor terms and a lack of strategic rationale.
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