The Chief Executives of two of the world’s biggest players in the aerospace market - BAE Systems and EADS - have expressed their ‘disappointment’ after a proposed merger between the firms - which was worth around £28bn - hit the rocks. Politicians in the UK, France and Germany couldn’t agree on the plans, which have been on the table for around a month now.
Franco-German EADS is the parent company of Airbus. BAE Systems is the British defence contractor and the favoured supplier to the British Ministry of Defence. Together, the sum of the two parts would have made it a global aerospace and defence force to be reckoned with, possessing business clout and fighting power equal to America’s Boeing Company.
What went wrong? Conflicting interests between the British, French and German governments was at the crux of it, with how many shares in the merged company going to respective governments possibly the biggest bone of contention. The British were worried that more government influence on the merged firm could have upset BAE’s strong relationship with the Pentagon.
And even if a deal was struck, there might have been another hurdle in the form of other big shareholders. Earlier this week fund manager, Invesco Perpetual, expressed ‘significant reservations’ about the ‘logic’ of the proposed deal. And that’s not to say any deal might not get back on the table in the coming months.
Written and presented by Marverine Cole.