Coming up

Don't miss




No strategy and a beige suit

Read more


The World This Week - 29 August 2014 (part 2)

Read more


The World This Week - 29 August 2014

Read more


Alain Choquette: A Hilarious Magician in Paris

Read more


France welcomes Iraqi Christian refugees

Read more


Emmanuel Macron: A new economy minister with a pro-business agenda

Read more


More of this year's best Observers stories

Read more

#TECH 24

Changing the world, one video game at a time

Read more


Socialist Party summer conference kicks off in explosive atmosphere

Read more

  • Exclusive: Fabius warns of further sanctions against Russia

    Read more

  • Experimental Ebola drug ‘ZMapp’ heals all monkeys in study

    Read more

  • IMF stands behind Lagarde amid French corruption probe

    Read more

  • Ukraine to relaunch NATO membership bid

    Read more

  • Suriname leader’s son pleads guilty to courting Hezbollah

    Read more

  • British killer escapes from French psychiatric hospital

    Read more

  • Chelsea’s Torres set for AC Milan switch

    Read more

  • Police hunt for British boy with brain tumour taken to France

    Read more

  • France shines in IMF list of world’s promising economists

    Read more

  • Mapping Ukraine: Canada and Russia in ‘tweet for tat’ row

    Read more

  • First case of Ebola confirmed in Senegal

    Read more

  • Obama has 'no strategy yet' on potential Syria strikes

    Read more

  • Netflix to woo French with ‘House of Cards’ set in Marseille

    Read more

  • French businesses ‘hoping for a new Thatcher’

    Read more

  • Syrian refugees surpass 3 million, UN says

    Read more

  • West backs Ukrainian claims of Russian incursion

    Read more

  • Libyan PM resigns as Islamists set up rival administration

    Read more

  • UN says 43 peacekeepers captured in Golan Heights

    Read more

  • The deleted tweets of Manuel Valls

    Read more

  • Peru seizes record 6.5 tonnes of Europe-bound cocaine

    Read more


EADS-BAE talks resume as critical deadline looms

Video by FRANCE 24

Latest update : 2012-10-09

France, Germany and Britain resumed talks on Monday to find common ground on the merger of British defence firm BAE and Europe's EADS aerospace giant, which would create the world's largest aerospace firm and a viable rival to US contractor Boeing.

Britain, France and Germany resumed talks on Monday to try to prevent a disagreement over state shareholdings wrecking a proposed merger of EADS and BAE Systems.

With just over two days until a 1600 GMT Wednesday deadline set by the UK, the aim is to make sufficient progress over the central issue dogging the talks to allow BAE Chief Executive Ian King and Tom Enders of Franco-German EADS to seek an extension.

BAE’s top investor questioned the very rationale of the $45 billion deal.

Plans by Airbus parent EADS and UK arms firm BAE Systems to create the world’s largest aerospace and defence company must overcome a knot of political concerns over security and jobs.

“If they can get the central issue of shareholding resolved, then there’ll probably be some more time to tie up other issues like headquarters, weights on the board and other matters,” said a senior diplomat following the negotiations.

“Otherwise, Enders and King have signalled they will pull the plug on the 10th”.

Officials failed to resolve incompatible demands over state involvement in a video conference on Friday. EADS and BAE denied German reports that the talks had collapsed.

There were few signs of progress after private contacts at the weekend. Plans have already been drawn up to request extra negotiating time, but the companies are unwilling to release pressure by deploying them until they have some real political progress to show UK regulators, banking sources said.

People close to the talks said the UK appeared most open to the deal, Germany was the least keen and France wanted more time to think it over. Yet as problems pile up, all sides have moved to deflect the responsibility in case the talks break down.

Despite the negative atmosphere left by Friday’s press briefings, industry experts say it is too early to say whether the world’s largest defence merger will happen but note the parties are used to negotiating down to the wire or even beyond.

EADS was created from a merger in 2000 only after talks between France and Germany broke down and the plan collapsed, bringing the two sides back together to negotiate a complex shareholder pact limiting the role of the French state.

However, those negotiations were held in secrecy while a blizzard of publicity surrounding the latest talks has brought pressure from investors and unleashed new negotiating demands.

BAE’s top shareholder Invesco Perpetual blasted the proposed deal on Monday, citing state interference, poor terms and a lack of strategic rationale. The investment company, which has 13 percent of BAE, is reported to have clashed in private with BAE leaders as soon as the talks surfaced last month.

BAE shares dipped 1 percent. EADS was fractionally lower.


In order to improve the chances of winning approval in the U.S., Britain wants France to commit in writing to forego any future increases in its shareholding, which would start out at 9 percent under the proposed 60:40 split between EADS and BAE.

France has told partners it has no intention of upping its stake but is unwilling to surrender sovereignty over future industrial policy. Barring a wider escalation of the problems surrounding the deal, sources briefed on the discussions said a formula would probably be found to get round the impasse.

Government leaders are being kept in the loop on the negotiations but there are so far no plans for direct intervention or a three-way summit, officials said.

Britain left open the door on Sunday to a German state participation in EADS-BAE in a move towards addressing Berlin’s demands for equal treatment with France in the new group.

Germany has renewed demands to have the headquarters and is involved in potentially tough negotiations with EADS about job guarantees and company conditions on continued defence orders.

“Whether this can be resolved depends on whether everyone wants this to work”, the diplomat said.

The United States is seen likely to want assurances that a system of co-operation in EADS between French and German governments or their industrial allies will not be resurrected.

Any risk of foreign state control is crucial as Washington considers whether to impose new conditions on the way BAE operates in the U.S. - a red line for the company and the UK.

Negotiators are keen to keep respective state shareholdings under 10 percent to avoid stirring U.S. concerns over possible foreign influence on its defence sector, an issue seen certain to be highlighted by Boeing and other U.S. rivals.

U.S. experts said this weekend anything over that figure would undermine the chances of U.S. approval.



Date created : 2012-10-08


    EADS, Britain's BAE in talks on possible merger

    Read more


    Qatar bids for stake in aerospace giant EADS

    Read more


    Boeing trumps EADS' bid for US Air Force refuelling contract worth €25 bn

    Read more