Doubt cast over BAE and Airbus merger
DOUBT has been cast on a multi-billion-pound merger going ahead which would see two of Bristol's biggest firms joining forces.
As reported in the Post, defence firm BAE Systems has been talking to Airbus parent company EADS about a £30 billion merger.
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Airbus at Filton
An estimated 5,000 people work for both firms in the Bristol area and thousands more work in companies which are involved in the aerospace industry.
The merger would create one of the largest and most powerful aviation companies in the world but has not been welcomed in every quarter.
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The highly complex arrangements both companies have with governments across the world mean that negotiations were always going to be difficult.
But BAE Systems yesterday warned it would walk away from the deal if it threatened its contracts in America with the US Defence Department.
And it also emerged there will be an inquiry into the deal. The Parliamentary inquiry will focus on whether the merger will affect jobs in the UK as well as the country's defence capabilities.
A spokesperson for the defence select committee 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."
MPs will be taking evidence on the possible merger in October and November before delivering a verdict.
It is highly unusual for Parliament to carry out a review of a proposed takeover of a stock market-listed business but the Government has a direct stake in BAE Systems.
Meanwhile, it has emerged Prime Minister David Cameron has been speaking to his French and German counterparts about the deal. A spokesman for Downing Street 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 that is the case. We are also talking to people in other countries about this.
"The Prime Minister spoke to Chancellor (Angela) Merkel on Friday night and has spoken to President (Francois) Hollande this morning.
"Clearly, the companies have activities in all three countries and you would expect us to stay in close contact on it. We have an interest in ensuring that the UK's interests are properly protected and we will do that."
Mr Cameron has not yet discussed the matter with US President Barack Obama but is expected to in the near future.
There has been speculation that the US could oppose the deal. Mr Obama has vetoed similar deals in the past and has a reputation for protecting American interests.
BAE has said the planned tie-up with Airbus owner EADS would form a "world-class" company, with combined sales of £60 billion and about 220,000 staff. The merged group would employ about 48,000 in the UK alone.
The deal, which would give BAE access to the lucrative civil aviation market, would leave BAE shareholders with 40 per cent of the combined group.
The two companies have until October 10 to finalise terms under takeover panel rules, but there was speculation that they may request an extension to the deadline following the announcement about the House of Commons inquiry.
Mr Cameron's official spokesman declined to give details of the PM's discussions with his French and German opposite numbers when he addressed reporters at a press briefing in Westminster.
Comments
by Lanata
Wednesday, September 26 2012, 10:09AM
“I take it back, they have now posted a general announcement and some quite unuseful FAQs - amost buried on the intranet !!”
by Lanata
Wednesday, September 26 2012, 10:08AM
“I take it back, they have now posted a general announcement and some quite unuseful FAQs - amost buried on the intranet !!”
by Lanata
Wednesday, September 26 2012, 10:07AM
“I take it back, they have now posted a general announcement and some quite unuseful FAQs!!”
by Jab_the_cab
Tuesday, September 25 2012, 8:49PM
“@Lanata ... you would think a company as large as BAE Systems would have an Intranet where the head honcho could publish an open letter and FAQs and everything?”
by KBarad
Tuesday, September 25 2012, 5:02PM
“@Lanata
I'm surprised. I would have thought that even if it was not announced in advanced to all employees (sad, but large companies don't trust their employees enough) I would expect that once it became international headline news talked about in half the offices in the industry that it would have been in an internal announcement. At least a token "don't panic" letter? If there has been nothing at all it's disappointing.
If there is a merger yes the government (and no I don't mean Cameron, it should be someone with knowledge who oversees this) should have a say in it: they have a share! It's also fair to say there will be discussions and maybe agreements between shareholders for common interests. However, I don't think the merger makes the jobs any less stable than they already are. Yes rationalisation of jobs is bound to happen, particularly among the support services, finance, HR, communications, etc. However, the rate BAE have been going the last few years I don't think there is any job security with them in UK, it's all been moving to USA!
I wonder if the biggest advantage of such a merger is in fact retention of IPR and knowledge. Rather than cycling hire and release, it's better to offer someone a position on an alternative project to keep their expertise in house and to keep it still working. the Civil and miltary branches compliment each other like that, provided there is freedom to move between them. It also means any patents that belong to a combined company benefit both, so twice the benefits to any bit of research.
Of course...Aerospace is a famously political industry though.”
by BishopstonMan
Tuesday, September 25 2012, 1:44PM
“The defence industry buyers (i.e. the government) should block this in the name of maintaining competition. The defence industry at present is very expensive but as companies merge this competitive element diminishes and we get a terrible and expensive hegemony. It's also bad for UK jobs as a merged company strives to remove overlapping job roles and premises.”
by Brizz_Tony
Tuesday, September 25 2012, 9:54AM
“Whilst BAe are still involved in defence contracts for this company - at present including aircraft, nuclear subs, aircraft carriers, UAV's and much more - they should be able to merge with a foreign company. They will need the runway at Filton if they go ahead, though, which I would welcome.”
by BCFCfinker
Tuesday, September 25 2012, 9:20AM
“Would there be a loss of tax revenue to the UK if this happened?
I wouldn't trust another country with UK jobs e.g. look at the outsourcing that has taken place in this country (there are still many places in Europe where labour is cheaper than here, once the bean counters in other countries start getting involved, manufacturing would be moved).
My instinct is, that in the long run, this would be bad for the UK.
For jobs, tax revenues, r&d and ultimately loss of independence from the EU.”
by Supersnakes
Tuesday, September 25 2012, 8:53AM
“This is not a good deal for GB or the defence and aerospace sectors.”
by Lanata
Tuesday, September 25 2012, 8:23AM
“It's a shame that BAE Systems isn't talking to us, the employees. All we've seen it what is in the press. EADS employees have all received a personal letter apparently!!”