Political hurdles place defence firms mega-merger in jeopardy

City A.M. Reporter
EUROPEAN aerospace group EADS is looking for a quick decision from governments on its plan to merge with British defence company BAE Systems, as France and Germany hold meetings to discuss a common position on the proposed tie-up.

“We are continuing constructive talks and hope for an agreement soon,” a spokesman said yesterday. “All the facts are on the table.”

France’s President, Francois Hollande, and German Chancellor Angela Merkel will discuss the merger plans at a meeting in Germany this weekend, and advisers are meeting next Thursday and Friday for preparatory talks.

The Bundestag, Germany’s lower house of parliament, will also discuss the merger plans next week, with the economy ministry due to report on how things stand.

France and Germany are keen to ensure they do not lose too much influence at Airbus-maker EADS. And German politicians have been calling for job guarantees.

Earlier this week, sources said BAE and EADS could walk away from a deal that would create an enlarged group worth $45bn if too many demands were placed on them by governments.