A proposed merger between BAE Systems and Airbus owner, EADS – which could create one of the ‘largest and most powerful aviation companies in the world’ – is being contested by governments around the world, telegraph.co.uk reports.
It appears that the £30 billion deal will now only go ahead after the two companies have ‘jumped through considerable political hoops’ with regard to the effects on British defence, the newspaper writes.
Both BAE and EADS have defence businesses in many countries beyond the UK, thus a merger could compromise relationships with the British, US and European governments. A cross-party Defence Committee will be assessing the impact on domestic defence.
It is likely that the French government, which currently owns 20 per cent of EADS, will oppose the deal and it is expected that German ministers will also.
The most significant factor appears to be gaining a foothold in the US market, something that EADS has been unable to do. BAE says it will not proceed with the merger unless full US backing is given.
A British government spokesperson, cited by thisisbristol.co.uk said: “Given the nature of the companies’ activities, the Government will clearly have some involvement and we need to ensure that the UK’s public interest is properly protected. We are working with the companies to ensure that this is the case.”
BAE and EADS have until 10 October to present a formal proposal for the deal but are expected to seek and extension owing to the contracted and complex issues relating to the negotiations.
It is claimed that the merger will create combined sales of £60 billion and generate 220,000 jobs – 48,000 of those in the UK.