LONDON: A group of British deputies tasked with scrutinising defence policy announced yesterday a probe into the possible merger of British arms maker BAE Systems with European aerospace giant EADS.
The Defence Committee, made up of MPs from across British political parties, said the inquiry spanning October and November would examine the impact of a tie-up on British defence, “including the protection of sovereign capabilities.”
It comes as Berlin said that Germany and France were in “intensive” talks with each other, EADS and BAE Systems regarding the possible $45bn (¤35bn) deal. In Paris, an advisor to the French defence ministry said that defence ministers from Britain, France and Germany would meet this week in Cyprus to discuss the project.
“A first tripartite discussion at the defence minister level will be held in Cyprus on the EADS/BAE file tomorrow or Thursday,” the aide said. He added that the meeting would take place within the framework of an informal meeting of defence ministers on the eastern Mediterranean island.
The proposed merger has raised major concern in Britain on fears that it would put a key strategic company in foreign control.
It has also sparked worries over Britain’s political relationship with the United States, from where BAE derives almost half of its business.
“The (British) Defence Committee is today announcing its inquiry into the possible merger of BAE Systems with EADS,” a statement said.
“The merger of two such large defence contractors would have a significant and strategic impact on their relationships with UK, US and European governments.
“It could also radically alter the defence industrial base in these countries. The inquiry will examine the likely impact of such a merger on UK defence including the protection of sovereign capabilities and the nature of the defence industrial base,” the statement added.
The announcement was made as it emerged that British Prime Minister David Cameron had spoken to his counterparts in France and Germany about the tie-up.
Cameron’s official spokesman declined to give details of the discussions but said that “given the nature of the companies’ activities... 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. We are also talking to people in other countries about this.”
The planned deal was a major topic in talks between German Chancellor Angela Merkel and French President Francois Hollande over the weekend.
Merkel told reporters afterwards that “the discussions were good and in a spirit of friendship, but we do not need to discuss the details in public, particularly when it comes to jobs”.
Hollande said the two governments would continue to “work closely together” and aimed to meet a deadline of October 10, by which time a formal bid must be made under British takeover laws.
Yesterday, the Defence Committee said its “expects to take oral evidence on the possible merger during October and November”. BAE Systems and the European Aeronautic Defence and Space Company (EADS) revealed this month that they were in talks to form a global aerospace and defence leader that would compete more effectively against US rival Boeing. Crucially, however, the proposed transaction would give BAE 40 percent of the proposed enlarged group and EADS the majority 60 percent stake.
Under the plan being discussed, the newly merged group will issue special golden shares to each of the French, German and British governments, to replace their current ownership structures.
AFP
