BAE-EADS deal faces inquiry as barriers mount

THE PROPOSED £30bn mega-merger between aerospace giants BAE and EADS faced new barriers last night as the UK parliament launched an inquiry into the plan and the German government privately raised doubts over the deal.

The House of Commons defence select committee confirmed that it would take the unusual move of holding hearings into the merger of two private companies.

It will take evidence during October and November and consider the impact that the deal would have on the protection of British sovereign capabilities, defence exports, jobs and trade and foreign policy.

“The merger of two such large defence contractors would have a significant and strategic impact on their relationships with UK, US and European governments,” the committee said in a statement.

A source close to the merger said the inquiry was “not unexpected”.

Meanwhile documents obtained by Reuters show that Berlin is concerned about its ability to protect local jobs if the deal goes ahead. The German stake in EADS is currently held by Daimler but the state development bank had been set to acquire part of this holding before news of the merger talks leaked earlier this month.

Britain has been broadly supportive of the merger and David Cameron has held discussions with French and German leaders to ensure UK interests are protected.

Yesterday business secretary Vince Cable said he had no major objections to the firms combining.