BAE-EADS Super Merger Idles on the Runway
As speculated, the EADS-BAE “super merger” is having trouble getting off the tarmac…
Plans were revealed last week that would result in the world’s biggest aero defense company. But Britain, Germany, France and Spain all have nationalized investment in the companies, complicating the deal.
Germany is the first to throw clouds over the merger. “We are in discussions with others about this. As for EADS, of course Franco-German co-operation plays a bigger role. We have to make a decision and give an answer within certain deadlines,” says German Chancellor, Angela Merkel.
Leading to hesitation for all involved is the prospect that job cuts will result, says David Reeths, Director for Aerospace and Defense Consulting at IHS Janes:
“It is going to be hard for some governments to overcome… the biggest obstacle to the merger is the potential loss of workforce in the European home countries. But the reality is that these countries were going to be facing these losses already. BAE already announced significant cuts in the United Kingdom.”
Sources, according to Reuters, are saying the EADS and BAE Systems would rather walk away from the deal than buckle on certain concessions.
And it’s getting down to the wire, because a firm agreement must be made by October 10 if the merger is to proceed.