September 13, 2012 / 3:15 PM / 7 years ago

Government "positive on BAE-EADS mega-merger"

LONDON (Reuters) - Prime minister David Cameron supports the potential $64 billion (39.6 billion pounds) merger between UK defence contractor BAE Systems and European aerospace group EADS, according to senior members of parliament.

“I think he (Cameron) will be pretty pleased to see this deal happen,” said former armed forces minister Nick Harvey, who last week lost his post at the Ministry of Defence as part of the prime minister’s cabinet reshuffle.

“I think the government will be pretty happy with it, because ... ultimately this will be a strong company that is going to be in a very good position to supply the European civil and defence market,” he added.

EADS and BAE Systems announced on Wednesday that they were in advanced talks over a mega-merger to create an industry giant, in what would be the biggest shake-up in Europe’s aerospace and defence sector in more than a decade.

In the potential tie-up, EADS would own 60 percent and BAE 40 percent of the new firm.

Peter Luff, a former Conservative defence minister who also left the government in last week’s reshuffle, told Reuters that BAE Systems had been talking to the government for “several weeks” before plans for the proposed merger were disclosed.

“The government obviously wanted to test the national security issues around it ... but I was not aware of a corporate view in government as I left, beyond making sure we actually protected our national interests in this,” said Luff.

Asked how the British government would fulfil its aim of ensuring that the public interest was protected in the deal, Cameron’s official spokesman said: “We will work with the companies to ensure that that happens. They have been keeping us informed of their discussions and will continue to do so.”

Reporting by Tim Castle and Rhys Jones; editing by Steve Addison

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