We could veto BAE deal, says Hammond
FRANCE and Germany will have to reduce their stakes in European aerospace giant EADS if the Government is to allow a proposed merger with BAE Systems to go ahead, Defence Secretary Philip Hammond warned yesterday.
Mr Hammond said it was a "red line" issue for the UK that the governments in Paris and Berlin gave up their ability to control the company. He said the Government was prepared to use its "golden share" in BAE – Britain's biggest defence contractor – to veto a deal unless its conditions were met.
The two firms employ around 5,000 people between them in the Bristol area and the £30 billion merger would lead to the creation of one of the most powerful firms in the aviation and defence sector. EADS is the parent company of airplane manufacturer Airbus.
"We have made very clear that we do have red lines around the BAE-EADS merger and that if they can't be satisfied, then we will use our special share to veto the deal," Mr Hammond said. "It is not, I think, necessary to have no French or German interest in the company. It is necessary to reduce that stake below the level at which it can control or direct the way the company acts. We want to see this company prospering as a commercial business focused on doing the things that are right for the business, not being beholden to or controlled by any one government."
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BAE Systems has just four days before it has to agree the deal, abandon it or apply for more time from the UK Takeover Panel.