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Germany Says EADS-BAE Merger Talks Need More Time

Sep. 27, 2012 - 06:25AM   |  
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NICOSIA — Talks on a tie-up between aerospace groups EADS and BAE Systems looked set for extra time Sept. 27, after German Defense Minister Thomas de Maiziere and another source said negotiations had some way to go.

“I think we need more time,” de Maiziere told journalists in Nicosia after meeting the day before with his British and French counterparts to discuss the proposal, which would create a giant to rival the U.S. group Boeing.

A source close to the talks told AFP that it looked as though British arms maker BAE Systems and the European Aeronautic Defence and Space Company would ask Britain’s stock market regulator to extend its Oct. 10 deadline.

Under British stock market rules, the two groups have until Oct. 10 formally to announce that they intend to combine their activities or ditch the project, though they could also ask for a delay.

The British side did not think that this would be a problem under British stock market rules, the source added.

Both sides apparently want to avoid that situation however.

De Maiziere underscored that the proposed deal “is a complex situation. There are a lot of questions and conditions.”

While highlighting “constructive discussions” between the three countries’ defense chiefs, the German added that “nothing has been decided yet.

“The ministers of defense are responsible only for one very difficult and important aspect, but there are other aspects,” notably shareholders interests.

France and Germany each hold significant stakes in EADS capital.

The German minister, who spoke following talks on the sidelines of a general defense ministers meeting in the Cypriot capital, declined to comment on the question of how much each group would own in a combined entity.

The economy and finance ministries were also involved in the negotiations, de Maiziere noted.

According to a German economy ministry report, Berlin has reservations over the fact that EADS, the parent company of Airbus, would hold only 60 percent of the new group under the proposed $45-billion (35-billion-euro) deal, and that veto rights of participating countries would be limited.

The ministry also said that there had been inadequate guarantees on keeping company plants open, potentially threatening jobs.

On Sept. 26, EADS chief executive Tom Enders addressed German lawmakers in Berlin regarding the mooted deal, but people involved said he had not yet won them over.

“The federal government has kept open whether it wants to give its approval here or not,” Kerstin Andreae, deputy chairwoman of the Green party’s parliamentary group, said.

“From what we hear, it’s not just a question of ‘how’ on the merger but also very basically ‘whether’,” she said after the committee met.

The government’s aeronautics sector coordinator Peter Hintze said later during the parliamentary question time: “The position of the government on the question of the merger is still completely open.”

EADS has operations in France, Germany and Spain.

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