DEFENCE giant BAE Systems is reportedly facing a growing investor revolt over its plans to merge with European rival EADS due to a lack of detail on the deal.
A number of key stakeholders are understood to be frustrated by ongoing political battles between the three governments who will have to sign off the merger – the UK, France and Germany.
It is also understood that many investors have only been spoken to once by BAE management since plans for the deal surfaced last month and are growing increasingly angry at the lack of information.
BAE Systems only has until Wednesday before it has to agree the deal, abandon it or apply for more time from the UK Takeover Panel.
Sources close to the negotiations expect that a request for further time will be made.
Meanwhile, fears are also mounting that the US Government could prove the ultimate barrier to a BAE-EADS merger.
British ministers are concerned that intense lobbying of the US Government by American aerospace and defence giant Boeing will scupper a deal.
BAE and EADS face a number of hurdles if the deal is to go through, with France and Germany said to be keen to keep significant equity stakes in the merged group.
Prime Minister David Cameron faced a major Conservative rebellion after 45 MPs signed a letter calling on the Prime Minister to veto the £28b deal.
They are concerned that such a deal could see the UK losing control of its defence industry.
The German Government may also block the move, it has been reported, after demanding that its stake is equal with France’s and that the newly merged company’s head office should be in Munich.
It is thought Germany is insisting on taking a 9% stake to match France’s holding.
Britain holds a “golden share” in BAE, meaning it can veto deals that are seen to put the public interest at risk, but is not thought to have made any demands for a direct equity holding in the enlarged company.
EADS chief executive Tom Enders – understood to be a long-term critic of EADS’s state shareholdings – reportedly said earlier this week he would consider guaranteeing jobs as he seeks to win Germany’s support for the deal without it insisting on a stake.
If the deal goes ahead, it will create the world’s largest aerospace group, with 220,000 staff, 50,000 of which would be based in Britain.
However, 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.