A POTENTIAL multi-billion pound merger between defence giant BAE Systems and Airbus aircraft manufacturer EADS has come under further pressure after a major shareholder demanded a better deal.
French media tycoon Arnaud Lagardere, who is EADS chairman and whose company Lagardere owns a 7.5% stake, wants better terms for French controlling shareholders.
And German automotive company Daimler, which owns a 22.5% stake in EADS, though only 15% directly, is also thought to share many of Lagardere’s concerns.
Lagardere urged EADS management to complete “without delay, the indispensable re-examination of the project to combine EADS and BAE, to better take into account the interest of all the French controlling shareholders of EADS”. EADS chief executive Tom Enders is understood to have held talks with the billionaire in a bid to salvage the deal, which would create the world’s biggest aerospace company, with a market value of around £31bn.
The obstacle comes after Enders and BAE chief executive Ian King appealed for political support for a merger which, they said, would create a global company that would be more than the sum of its parts.
The deal will require the approval of the British, French and German governments if it is to go ahead, while the United States is understood to be taking a close interest because of BAE’s involvement in sensitive US defence projects.
BAE said a tie-up with EADS would form a “world-class” company in its sector, with combined sales of £60bn and around 220,000 staff.
The merged group would employ around 48,000 in the UK alone, although more than 400 of its 700 North East staff are likely to be gone before any merger is complete.
The firm is closing its Vickers plant in Newcastle and cutting 100 staff in Washington. UK unions fear that the merger would trigger thousands of job cuts, while the British government is expected to block the deal if it sees the French and German governments take stakes above 9% in the new combined entity.
Enders said: “It’s absolutely not surprising that some shareholders are concerned about the benefits and their returns.”
However, he also warned that the merger talks need to press ahead because of the uncertainty for workers and investors. He said: “We cannot go on for much longer.”
In a joint article published by the Financial Times, German paper Die Suddeutsche Zeitung and French paper Le Monde, Mr King and Enders attempted to reassure politicians’ concerns. They said: “BAE Systems and EADS are both strong businesses with clearly defined strategies that have enabled them to make progress in the last five years, and which would take them forward as independent companies.”
BAE is an expert in defence, security and the military, whereas the majority of EADS’ work is commercial.
EADS, a consortium of aerospace and defence manufacturers from France, Germany and Spain, is headquartered in Paris and Berlin.
It employs nearly 15,000 people in the UK including at its Airbus wing sites in Filton, near Bristol, and in Broughton, North Wales.
