| BERLIN/FRANKFURT, Sept 19
BERLIN/FRANKFURT, Sept 19 The leaders of France
and Germany will seek a common position at a series of meetings
this week on a $45 billion defence merger that could involve
them having to giving up strategic influence in aerospace group
After talks on a tie-up between EADS and Britain's BAE
Systems were leaked last week, government officials
from across Europe have this week been setting out their views
on the deal.
While no government has spoken out directly against the
merger, and officials seem to see benefits in creating a company
that would have far more weight on the world stage, there are
concerns that too many demands from politicians could result in
the deal being scrapped.
Angela Merkel said on Wednesday she planned to discuss the
matter with French President Francois Hollande at a meeting on
Sources had said there would already be preparatory
high-level talks on Thursday and Friday. A "pre-decision" for a
common position with France could be taken at these preparatory
talks, one source said.
A combination of BAE and Airbus owner EADS would overtake
U.S. rival Boeing as the world's biggest aerospace and
defence company in terms of sales.
Chancellor Angela Merkel's coalition government has not yet
come up with a unified position on the talks, though some German
politicians want guarantees for German jobs and to see some
activities being headquartered in Germany.
"It cannot be that a Franco-British company is created out
of a Franco-German company," Joachim Pfeiffer, a spokesman for
Merkel's CDU party told Reuters on Wednesday, saying that he
would not accept it if the merged company based its commercial
activities in Toulouse and its defence operations in London.
EADS employs almost 50,000 people in Germany at 29 different
sites. German media reports this week that EADS boss Tom Enders
offered job guarantees to the group's 20,000 defence workers
have been dismissed as "nonsense" by officials and by EADS.
In the state of Bavaria, where EADS employs 15,000 people,
the regional economy minister said a merger might improve the
firms' competitive position but his focus was on securing jobs.
Keeping jobs and technology expertise within Europe's
largest economy should be a key factor for the government in
deciding whether to approve the deal, a politician from the
German opposition Social Democrats said on Wednesday.
"There seems to be some advantages," Hubertus Heil told a
German radio station, adding that the government should make an
unbiased review of the economic benefits.
One of the benefits for EADS in joining with BAE is that it
would dissolve a cumbersome shareholder pact dictating that the
percentage of shares held by German and French investors must be
For France though, a combination of EADS with Britain's BAE
could result in it having to give up influence in a company it
has controlled since it was set up, as it would see its stake in
the combined group shrink to 9 percent from 15 percent
For Britain, the key is to ensure that the creation of a
European group would not affect BAE's strong sales in the United
States, which have benefited from the "special relationship"
between the two countries.
"If the deal goes ahead it would open up new prospects for
Europe in the defence market," Elisabeth Guigou, head of the
French parliament's foreign affairs committee, told Reuters. She
added though that completing such huge merger deals was "not
easy" and that negotiations would likely take a long time.
EADS and BAE have said they will offer the governments of
France, Germany and Britain a "golden share" in the new company,
which sources say is aimed at preventing a hostile takeover.
Currently, Berlin does not hold a direct stake in EADS, but
is in talks to acquire a 7.5 percent holding from carmaker
Daimler through state development bank KfW.
These talks have now stalled, a German government source
told Reuters. However, if France holds on to its stake in a
merged group, then Germany would likely strive for the same.