BAE and EADS End Merger Talks Following Government Intervention

It was reported from Germany that  German Chancellor Angela Merkel called French President François Hollande to end the deal. Ms. Merkel told Mr. Hollande that Germany believed the deal's negatives outweighed its benefits for her country, and that she couldn't support it.

While visionary, the proposal was based on sound industrial logic that would have delivered real synergies and cost savings, and increased competitiveness for all involved. Opposition from some investors notwithstanding, a merger offered the best chance to create a truly integrated European aerospace company combining the world’s leading commercial aircraft company – the EADS subsidiary Airbus – with the continent’s biggest defense group, BAE. 

EU-Digest

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.

Read more: EADS-BAE Merger Hinges on Germany as France, U.K. Unite - Businessweek

Eurofighter’s price cut down to win Indian deal?

Britain's BAE Systems is reported to be preparing a fresh bid which may include cutting down the prices for the world's biggest fighter jet order despite India's rejection of its Eurofighter Typhoon in favor of France's Dassault Rafale.

India chose the French fighter in January in a deal worth nearly 13 billion pounds, for 126 aircraft.


India's decision had disappointed many in Britain, including Prime Minister David Cameron. In a report without mentioning the source of information, The Mail today said: "BAE believes that when India scrutinises the Rafale and assesses the French submission, it will realize the Eurofighter is a superior aircraft that will be cheaper overall".

Read more: Eurofighter’s price cut down to win Indian deal?