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EADS/BAE battle to rescue merger

Tuesday, October 02, 2012 - 02:14

Oct. 2 - EADS and BAE Systems are battling to save their $45 billion merger plan from the crossfire of competing interests on Monday as governments and shareholders staked out positions in talks aimed at creating the world's biggest arms firm. Hayley Platt reports.

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The proposed merger between BAE Systems and EADS has hit more turbulence. Politicians in Britain, Germany, France and Spain are doing battle over how the new company will be split. 18 days after the proposal was announced a number of key obstacles remain. Britain is one of them. BAE is a key US defence supplier with 38,000 UK employees - UK defence analyst Robin Niblett says satisfying all interests isn't easy. SOUNDBITE: Robin Niblett, defence expert, Chatham House think tank, saying (English): "It's critical that the UK retains certain defence capabilities here on shore. It's also essential that BAE Systems keeps access to the U.S. defence market without cutting the shareholdings of the French and German governments those two things won't happen." EADS' CEO, Tom Enders, has been in London trying to convince the UK the deal won't cost jobs or compromise security. SOUNDBITE: Tom Enders, CEO, EADS, saying (English): "We could build a company not only financially more resilient going forward but that would achieve a much stronger platform for growth." But current shareholders have also thrown a spanner in the works. French media group Lagardere, which owns a 7.5 percent stake in EADS, says the proposed 60:40 split is "unsatisfactory". German auto maker Daimler, which indirectly controls almost a quarter of EADS, reportedly shares a similar view. And EADS is yet to agree what stake the French and German governments can have in the new company. One report suggests it could be as high as 13 and a half percent. But the UK apparently won't accept anything above 9 percent. The US authorities need to be convinced too and quickly. The terms of the deal must be presented by October 10. And EADS is also keen to halt a 16 percent share dive which has wiped 4 billion euros off the company's value since the deal was first announced. Hayley Platt, Reuters

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EADS/BAE battle to rescue merger

Tuesday, October 02, 2012 - 02:14