France, Germany seek common stance on aerospace firm merger

The leaders of France and Germany will seek a common position at a series of meetings this week on a €34.5bn defence merger that could involve them having to give up strategic influence in aerospace group EADS.

After talks on a tie-up between EADS and Britain’s BAE Systems were leaked last week, officials across Europe have been setting out their views on the deal.

While no government has spoken out directly against the merger, and officials seem to see benefits in creating a company that would have far more weight on the world stage, there are concerns that too many demands from politicians could result in the deal being scrapped.

German chancellor Angela Merkel said on Wednesday she planned to discuss the matter with French president François Hollande on Saturday.

Sources had said there would already be preparatory high-level talks today and tomorrow. A “pre-decision” for a common position with France could be taken at these preparatory talks.

A combination of BAE and Airbus owner EADS would overtake US rival Boeing as the world’s biggest aerospace and defence firm in terms of sales.

Merkel’s coalition government has not yet come up with a unified position on the talks, though some German politicians want guarantees for German jobs and to see some activities headquartered in Germany.

“It cannot be that a Franco- British company is created out of a Franco-German company,” Joachim Pfeiffer, a spokesman for Merkel’s CDU party said.

EADS employs almost 50,000 people in Germany at 29 sites. German media reports this week that EADS boss Tom Enders offered job guarantees to the group’s 20,000 defence workers were dismissed as “nonsense”.

One of the benefits for EADS in joining with BAE is that it would dissolve a cumbersome shareholder pact dictating that the percentage of shares held by German and French investors must be equal.

EADS and BAE have said they will offer the governments of France, Germany and Britain a “golden share” in the new firm, which sources say is aimed at preventing a hostile takeover.

Currently, Berlin does not hold a direct stake in EADS, but is in talks to acquire a 7.5% holding from carmaker Daimler through state development bank KfW. These talks have now stalled, a source said.

Reuters

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