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Politicians 'must stay out of merged BAE/EADS'
14 September 2012BAE Systems will not tolerate political interference from either the French or German governments if a proposed £30bn merger with EADS goes ahead, it has been reported.
An article in The Financial Times claims that BAE will also insist that any merged defence and aerospace giant must base its defence business in the UK. Both issues are said to be critical to BAE's approval of plans for a merger.
Taken together, the French and German governments are said to control around 22.5 per cent of the EADS' shares, something which EADS CEO Tom Enders is said to want to reduce to 10 per cent.
In turn, the British government has a £1 'golden share' in BAE Systems which allows it to block foreign takeovers of the company or its board in order to protect national security.
Speaking in Afghanistan, Defence Secretary Philip Hammond said the government would use its share in BAE Systems to secure economic benefits to the UK and protect national security.
"The British government will have to be satisfied that this is in the UK's national interest, because we have a special share in BAE systems," he told The Guardian.
"We will want to be reassured not just about the security implications but about the implications for the future allocation of work to the UK. It's not just military work but Airbus work."
Former defence secretary Lord Reid said that BAE and EADS would be "complementary" together and that the deal was "very appealing" in a commercial sense.
"EADS is well grounded in civil airliners and BAE in the defence side, and they are also complementary geographically," he said.
"In commercial terms it appears to make sense, but there are a large number of complexities and obstacles and difficulties to be overcome, not least on the political side."
HAVE YOUR SAY
14 September 2012
What the hell would Reid know about it.
And it is no good BAE saying they will not tolerate political interference if the deal goes ahead. EADS is all about government funded grand projects of the type the UK used to do, and France and Germany still do. The chances of Germany and France agreeing to that are nil, so the deal should be off - if BAE are taken at face value - which with the current BAE board infestation is not a good idea. They would sell the company out regardless if they could get away with it!
And from EADS point of view it is Germany, not France pushing the deal. Germany knows that beyond the Typhoon if the UK and France go bilateral the game is over for Germany as far as airborne combat UAVs are concerned. France has Dassualt and calls the shots at Airbus so are probably OK with the status quo. The UK has most to loose from this deal - the UK's preeminent position in any forthcoming UCAV program would be destroyed by France and Germany if BAE were to merge with EADS.
I think when the deal fails - which it will - the board of BAE should step aside for proper engineers to step in and run the company. And it would probably be a good idea for BAE to be split into separate UK owned and operated units along the lines of land/sea and air. And BAE MUST get back into civil aerospace with their own regional jet or business jet program, paid for by selling BAE Inc, the virtual stateside investment fund BAE likes to pretend is a US subsidiary. The greed, stupidity and corruption of the current BAE board must be brought to an end.
Martin Bayliss - Stroud
14 September 2012
I think this will be determined by whether BAE is forced to divest it's US business by congress as they have laws that ban any company owned by foreign governments from owning a majority stake in major US aerospace and defence companies. This has been the problem for EADS in the past and if it is not cleared up will result in BAE inheriting the problem which it currently does not have. I think this is the reason the markets are not looking favourably on the merger. If the French and German governments were to divest their own interests in EADS then it would be possible.
I only give this a 50/50 chance of going through at best.
Graham - High Wycombe
15 September 2012
I cannot believe that this merger is in the national interest. It will be a disaster for British industry and will spell the end of our independence. The idea of something being "very appealling" to a politician makes me extremely worried. If we had politicians who were passionate about Britain, British industry and British exports (rather than Britain and its products being a solution to unemployment being managed by foreign companies) then we might get somewhere. Our politicans are sleepwalking us into national impotence and meanwhile our people wonder why we are suffering in an age of austerity. People of Britain awake! Look to Germany and how it drives industry - our future must NOT be determined by the value of shares and short-term profiteering.
Michael - Hertfordshire
17 September 2012
If the merger does not go ahead, BAE must indeed seriously look at their business structure and decide which branches should be disposed of. They should continue with the Typhoon, Hawk, UAVs and submarines but begin divesting themselves of certain non-defence products. With regard to re-entering the commercial aircraft business, there is now a global over-capacity in the construction of airliners and business jets and - unless they acquired a foreign builder such as Embraer - it would be a bad business move. Finally, if anyone thinks that BAE should consider a merger with the likes of Boeing, in order to further cement the "special relationship", they should think again. There is no way that Congress would agree to the location of a merged military division HQ in the UK and, as BAE does not have a civil aircraft sector, Wharton would become a mere production facility for parts of aircraft designed and assembled in America.
MikeB - Liverpool, UK
18 September 2012
What is being proposed is effectively a takeover of the UK's BAE by a defacto French/German firm- EADS...
If this is allowed to occur- how long until the UK's only other defence firm with extensive contracts in the US and world-wide, Rolls-Royce, is devoured by one of France or Germany's companies??
Would France enable- or even allow- a foreign-takeover of one of its defence mega-companies such as Thales, Snecma, Safran, Dassault or DCN??
Roderick V. Louis - Vancouver, BC, Canada