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BAE-EADS merger plans prompt three-way political talks BAE-EADS merger plans prompt three-way political talks
(about 1 hour later)
The planned merger of BAE Systems and EADS was the subject of "intensive" weekend talks among the French, German and British leaders.The planned merger of BAE Systems and EADS was the subject of "intensive" weekend talks among the French, German and British leaders.
The proposed tie-up was on the agenda at a summit between German Chancellor Angela Merkel and French President Francois Hollande.The proposed tie-up was on the agenda at a summit between German Chancellor Angela Merkel and French President Francois Hollande.
Both leaders separately spoke to the Prime Minister David Cameron, Downing Street confirmed.Both leaders separately spoke to the Prime Minister David Cameron, Downing Street confirmed.
All three must give the merger their blessing before a 10 October deadline.All three must give the merger their blessing before a 10 October deadline.
The French and German governments were "speaking with each other and also with the companies" according to Chancellor Merkel's spokesman, Steffen Seibert.The French and German governments were "speaking with each other and also with the companies" according to Chancellor Merkel's spokesman, Steffen Seibert.
"The topic... is so sensitive that one should not discuss in public the details of what is being considered," he said."The topic... is so sensitive that one should not discuss in public the details of what is being considered," he said.
"There is a joint consideration of this question and this is happening in an intensive fashion.""There is a joint consideration of this question and this is happening in an intensive fashion."
No guaranteesNo guarantees
The two leaders are seeking to hammer out a common position on the planned £28bn ($45bn) merger between defence firm BAE and defence and aerospace group EADS, according to the news agency Reuters, which had obtained a discussion paper from the German economy ministry.The two leaders are seeking to hammer out a common position on the planned £28bn ($45bn) merger between defence firm BAE and defence and aerospace group EADS, according to the news agency Reuters, which had obtained a discussion paper from the German economy ministry.
The future of EADS, which owns the European aircraft manufacturer Airbus, is highly sensitive in France and Germany, because it is a major defence contractor and a major employer in both countries.The future of EADS, which owns the European aircraft manufacturer Airbus, is highly sensitive in France and Germany, because it is a major defence contractor and a major employer in both countries.
EADS would comprise 60% of the planned new company, which would have £60bn in sales and 220,000 employees worldwide, including 50,000 in the UK.EADS would comprise 60% of the planned new company, which would have £60bn in sales and 220,000 employees worldwide, including 50,000 in the UK.
The paper noted that the deal on the table provided no guarantees that the merged company could not itself be subject to a takeover in the future.The paper noted that the deal on the table provided no guarantees that the merged company could not itself be subject to a takeover in the future.
It noted that the French and German governments would have no right to consultation about future operating decisions, such as whether to relocate production to another country.It noted that the French and German governments would have no right to consultation about future operating decisions, such as whether to relocate production to another country.
It also suggested that EADS' share of the new company should be closer to 70%.It also suggested that EADS' share of the new company should be closer to 70%.
National securityNational security
The UK government holds a golden share in BAE Systems, granting it the right to block any deal, although it is thought to favour the merger.The UK government holds a golden share in BAE Systems, granting it the right to block any deal, although it is thought to favour the merger.
According to a Downing Street spokesman, Mr Cameron spoke to President Hollande on Monday morning, having previously spoken to Chancellor Merkel on Friday night.According to a Downing Street spokesman, Mr Cameron spoke to President Hollande on Monday morning, having previously spoken to Chancellor Merkel on Friday night.
BAE Systems is intimately involved in UK defence procurement and national security, prompting the parliamentary defence committee to launch a new inquiry into the deal on Monday.BAE Systems is intimately involved in UK defence procurement and national security, prompting the parliamentary defence committee to launch a new inquiry into the deal on Monday.
Both companies are big employers in the UK, including BAE shipyards in Scotland and EADS' Airbus wing factory in North Wales.Both companies are big employers in the UK, including BAE shipyards in Scotland and EADS' Airbus wing factory in North Wales.
Another major concern for the UK is BAE's relationship with the Pentagon. The US government is one of its biggest customers, and has allowed BAE to work on classified defence contracts such as the new F-35 Joint Strike Fighter.Another major concern for the UK is BAE's relationship with the Pentagon. The US government is one of its biggest customers, and has allowed BAE to work on classified defence contracts such as the new F-35 Joint Strike Fighter.
The Downing Street spokesman said Mr Cameron had not yet discussed the matter with President Obama.The Downing Street spokesman said Mr Cameron had not yet discussed the matter with President Obama.
Various rumours circulated over the weekend about how the deal might be structured to take account of national security concerns, including the suggestion that the US business might be ringfenced off.Various rumours circulated over the weekend about how the deal might be structured to take account of national security concerns, including the suggestion that the US business might be ringfenced off.
There had also been speculation that the 10 October deadline would be delayed to provide more time for the talks, but this was quashed by EADS on Monday. There had also been speculation that the 10 October stock exchange deadline would be delayed to provide more time for the talks, but this was quashed by EADS on Monday.
"It is our intention and current expectation that we will be able to provide further clarity by 10 October," said a company spokesman."It is our intention and current expectation that we will be able to provide further clarity by 10 October," said a company spokesman.