BAE and EADS yesterday played down speculation that the merger ratio will be sweetened to make the deal more attractive to EADS shareholders, as the aerospace giant’s chief executive Tom Enders prepared to appear before German politicians today to address concerns surrounding the deal.
The rumours centred around the merger ratio, which could value EADS’s stake at more than 60 per cent.
The German government is thought to be supportive of an increased ratio, saying a 70:30 ratio would be a more accurate valuation.
An EADS spokesman said yesterday that the 60-40 shareholder split announced on 12 September was “the only valid statement on the subject”, adding that any speculation regarding a different ratio was “inaccurate”. BAE echoed this statement.
The proposed terms of the merger leave BAE with 40 per cent of the combined firm and EADS shareholders with 60 per cent.
A source close to the transaction yesterday told City A.M. that the original ratio was set taking into account “a range of factors”, and both parties believe “it is an appropriate reflection of the longer-term through the cycle relative valuations of the businesses”.
Reports yesterday also linked BAE finance chief Peter Lynas with the same role at the enlarged group. BAE chief executive Ian King has already emerged as the frontrunner to lead the combined company.
Should the merger go ahead, it would create the world’s largest defence and aerospace firm.