EADS-BAE merger collapses over gov’t opposition

written by australianaviation.com.au | October 11, 2012
EADS and BAE have collaborated on projects such as the Eurofighter. (Peter Gronemann via Flickr)

Merger talks between Airbus parent EADS and BAE Systems have collapsed after European governments failed to reach agreement over their respective stakes in the would-be conglomerate.

EADS and UK-based BAE said they had agreed between themselves on a merger plan based on “sound industrial logic,” but dropped the talks yesterday after months of negotiations had failed to bridge differences between Germany, France and Britain over the ownership and industrial structure.

The failure of the deal again highlighted the role of competing national interests even as European government seeks to build unity to tackle the continent’s debt crisis. The merger would have created an industrial giant to rival Boeing, the world’s largest defence and aerospace company.

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Opposition to the deal was seen as especially strong in Berlin, with the German government concerned that plans to headquarter the civil aviation business in France and the defence business in Britain would marginalise German influence. Berlin had sought a direct stake in the company equalling that of France as well as long-term guarantees for German jobs. The UK government had also expressed concerns that putting BAE under European government ownership would handicap its ability to compete for US military contracts, though those concerns had reportedly been overcome.

“We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders,” BAE Systems CEO Ian King said in a statement. “We believe the merger presented a unique opportunity for BAE Systems and EADS to combine two world class and complementary businesses to create a world leading aerospace, defence and security group.”

EADS CEO Tom Enders said the two companies, which have cooperated on a number of projects including the Eurofighter Typhoon, would continue to seek opportunities to work together.

“It is, of course, a pity we didn’t succeed but I’m glad we tried,” he said of the merger talks. “I’m sure there will be other challenges we’ll tackle together in the future.”

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