© BAE Systems Electronics Production | October 09, 2012

EADS and BAE merger on a knife-edge

The governments of Britain and France disagree on the level of involvement the French state should have in a proposed merged group of EADS and BAE Systems.
Reuters reports the disagreement has left the deal on a knife-edge, just 48 hours before the deal deadline. Reuters reported that British Defence Secretary Philip Hammond was opposed to France raising its ownership in the merged group over 9 percent. France owns 15 percent in EADS currently.

Britain is concerned that increased foreign ownership could damage BAE Systems' relationship with the United States. BAE currently employs 36,000 in the US and works on confidential military projects that could be endangered by foreign involvement, Britain fears.

In opposition to British concerns, the French government hopes to buy the 7.5 percent stake that French company Lagardere owns in EADs. The issue could be sticking point for the French government, one source told Reuters.


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