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| EADS and BAE merger must be re-examined, warns Lagardère | EADS and BAE merger must be re-examined, warns Lagardère |
| (about 2 hours later) | |
| A major shareholder in EADS has added further complication to the proposed €34bn merger with Britain's BAE Systems by urging EADS to re-examine the terms of an "unsatisfactory" deal. | A major shareholder in EADS has added further complication to the proposed €34bn merger with Britain's BAE Systems by urging EADS to re-examine the terms of an "unsatisfactory" deal. |
| The intervention of Lagardère, which owns 7.5% of EADS, has added a financial dimension to a transaction whose coverage over the past fortnight has largely been dominated by political concerns. | The intervention of Lagardère, which owns 7.5% of EADS, has added a financial dimension to a transaction whose coverage over the past fortnight has largely been dominated by political concerns. |
| To proceed, the combination of the UK's largest defence contractor and the owner of Airbus needs the approval of the British, French, German and US governments, the latter being BAE's largest and most politically sensitive customer. | To proceed, the combination of the UK's largest defence contractor and the owner of Airbus needs the approval of the British, French, German and US governments, the latter being BAE's largest and most politically sensitive customer. |
| Lagardère focused on the investor case on Monday when it released a statement criticising the terms of the tie-up, in which EADS shareholders will emerge with 60% of the business while BAE stockholders take 40%. | Lagardère focused on the investor case on Monday when it released a statement criticising the terms of the tie-up, in which EADS shareholders will emerge with 60% of the business while BAE stockholders take 40%. |
| "Lagardère calls on the management of EADS to undertake, 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," the company said. Lagardère's chief executive Arnaud Lagardère is also the chairman of EADS. | |
| The intervention comes amid reports that the German and French governments have agreed a common position on the deal, including controlling large shareholdings in the new business while giving up some veto rights. | The intervention comes amid reports that the German and French governments have agreed a common position on the deal, including controlling large shareholdings in the new business while giving up some veto rights. |
| Under the current structure, Lagardère also represents the Elysée's 15% stake in EADS, bringing the French interest to 22.5%, while Germany's national interest is represented by a 22.5% stake held by Daimler, the car manufacturer, which in recent months had been looking to sell down its stake to a state-controlled bank. | Under the current structure, Lagardère also represents the Elysée's 15% stake in EADS, bringing the French interest to 22.5%, while Germany's national interest is represented by a 22.5% stake held by Daimler, the car manufacturer, which in recent months had been looking to sell down its stake to a state-controlled bank. |
| According to the Financial Times, Germany and France would take direct stakes of 9% in EADS. Once Daimler and Lagardère's interests are added, the FT said, the total Franco-German ownership of the company would be 27%. The UK government, which has a golden share in BAE that allows it to block any change of ownership, has voiced concerns over the impact on 52,000 manufacturing jobs in Britain but has signalled that it is broadly in favour of the deal. | According to the Financial Times, Germany and France would take direct stakes of 9% in EADS. Once Daimler and Lagardère's interests are added, the FT said, the total Franco-German ownership of the company would be 27%. The UK government, which has a golden share in BAE that allows it to block any change of ownership, has voiced concerns over the impact on 52,000 manufacturing jobs in Britain but has signalled that it is broadly in favour of the deal. |
| BAE and EADS declined to comment. However, the companies' chief executives made a renewed declaration of the deal's merits on Monday morning in a joint op-ed piece published in the UK, France and Germany. | BAE and EADS declined to comment. However, the companies' chief executives made a renewed declaration of the deal's merits on Monday morning in a joint op-ed piece published in the UK, France and Germany. |
| Ian King, the BAE chief executive, and his EADS counterpart, Tom Enders, said: "With the necessary political will and support, management determination, and proper governance, BAE Systems and EADS can produce a whole that is greater than the sum of its parts. Together, we would become a business with a global footprint, and a wider customer base. | Ian King, the BAE chief executive, and his EADS counterpart, Tom Enders, said: "With the necessary political will and support, management determination, and proper governance, BAE Systems and EADS can produce a whole that is greater than the sum of its parts. Together, we would become a business with a global footprint, and a wider customer base. |
| "We would be able better to ride the cycles of civil aviation demand and defence spending. And we would be a business with the scale and stability to invest more in R&D, and a force for greater competition and growth. All of this would deliver tangible benefits to our customers in each of the defence, aerospace and security worlds." | "We would be able better to ride the cycles of civil aviation demand and defence spending. And we would be a business with the scale and stability to invest more in R&D, and a force for greater competition and growth. All of this would deliver tangible benefits to our customers in each of the defence, aerospace and security worlds." |
| BAE and EADS are working to a 10 October deadline to thrash out a deal. Enders and King indicated that the merger would end Paris and Berlin's dominance of EADS. Enders' predecessor, Louis Gallois, had always denied political interference at EADS but the wrangling over his succession this year, and over the BAE deal, confirmed that politics was a major factor at EADS. | BAE and EADS are working to a 10 October deadline to thrash out a deal. Enders and King indicated that the merger would end Paris and Berlin's dominance of EADS. Enders' predecessor, Louis Gallois, had always denied political interference at EADS but the wrangling over his succession this year, and over the BAE deal, confirmed that politics was a major factor at EADS. |
| Enders and King said the new business would give all shareholders an equal say. "That would mean creating a business with governance structures which would enable it to operate in a normal commercial manner and which confers the same rights on all shareholders, large and small." | Enders and King said the new business would give all shareholders an equal say. "That would mean creating a business with governance structures which would enable it to operate in a normal commercial manner and which confers the same rights on all shareholders, large and small." |