Some investors have argued the proposed ratio is weighted too heavily in favour of BAE, which is heavily exposed to shrinking national defence budgets.
BAE is Europe’s largest defence company and a top 10 supplier to the United States, by far the largest defence market.
GERMAN GOVERNMENT EYES 70:30
Germany’s Daimler, which was in talks to sell a 7.5 percent stake in EADS to Germany’s state bank KfW, is one investor unhappy with the terms.
The German government on Monday set out a list of reservations about the deal, saying a 70:30 ratio would be a more accurate valuation, yet other sources familiar with the talks said BAE would likely oppose such changes.
“Changing the 60/40 split is just not on the table at all,” said a banker working on the deal, who declined to be named.
Rationale for the merger includes striking a balance between civil and military revenues, with Airbus airliners on one side, and on the other BAE’s defence work, which ranges from nuclear submarines to armoured personnel carriers.
Yet the deal is fraught with national economic and security concerns. A mooted merger between operations on the two sides more than a decade ago collapsed.
The French government holds a direct stake in EADS and is concerned that the deal would dilute its influence, while Germany wants to keep jobs in the country.