EADS-BAE Merger Hinges on Germany as France, U.K. Unite - by Jacqueline Simmons, Chris V. Nicholson and Aaron Kirchfeld

European Aeronautic, Defence & Space Co. (EAD) and BAE Systems Plc (BA/) are struggling to convince Germany and skeptical investors to back their merger plan, with less than three days to go before a regulatory deadline. 

Even as the French and British governments have agreed with EADS and BAE on the terms of a combination, Germany is holding out for more, people familiar with weekend talks said. Invesco Ltd. (IVZ), BAE’s largest shareholder with 13.3 percent, said it opposes the combination as it lacks “strategic logic.”

“The merger would materially jeopardize BAE’s unique and privileged position in the U.S. defense market, and has been unable to identify any corresponding benefits to offset this,” Invesco said in a statement today.

The two companies have been hamstrung in what they can tell investors until a merger plan is delivered. Germany, which currently doesn’t own a direct holding in EADS, is concerned about being marginalized. The business would be headquartered in France, with defense operations run out of London, leaving Germany without a center of command. Chief Executive Officer Tom Enders, who is German, scaled back a Munich administrative hub this year.

Germany has to join France and the U.K. in signing off the agreement to try and form the world’s largest aerospace and defense company by sales.

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