September 28, 2012
Credit: Credit: Eurofighter
Plans to create a new European defence giant entered a crucial political phase on Friday as Germany prepared to seek equal standing with France in a planned $45 billion merger of Airbus parent EADS and Britain’s BAE Systems.
Ending days of uncertainty while Berlin weighed its attitude to the merger, a German official said the government was ready to send its proposals to France, its main partner in EADS and Europe, in a starting signal for detailed discussions.
France and Germany, which oversaw the creation of EADS as a counterpart to the single currency 12 years ago, hold the key to the next chapter of European integration as they seek to defend their interests even while tackling the region’s debt crisis.
Agreed by Chancellor Angela Merkel’s office and the economy ministry, spanning the main parties in her centre-right coalition, Germany’s proposals are aimed at preserving a balance of power between the two states in the merged company, the official said.
Sources familiar with the matter say this would mean Germany buying shares in EADS, probably from core shareholder Daimler, the German car firm, which wants to cut its holding. A similar move had been in the works before the talks.
But Britain, which must also give its approval for the merger, is likely to resist any new state participation in part for ideological reasons and in part to protect BAE’s strong defence business in the United States, the sources said.
The demand sets the stage for potentially thorny negotiations between Germany and France, which wants to keep its stake in the company.
France directly owns 15 percent of EADS and wants to retain its right to influence group strategy, currently conducted in EADS through a complex pact that includes a 7.5 percent stake held by French conglomerate Lagardere.
France has also asked that the enlarged group’s corporate headquarters be based in Toulouse, its aerospace capital where Airbus is also based, and wants guarantees over the future of its defence industry, a person familiar with the proposals said.