Tue, Sep 25, 2012 - Page 15 News List

French government wants part of EADS-BAE tie-up


European aerospace groups European Aeronautic Defence and Space Company (EADS) and Britain’s British Aerospace (BAE Systems) are facing obstacles in their proposed tie-up from the French government, the German economic daily Handelsblatt reported in its edition which was set to appear on newsstands yesterday.

The newspaper, citing a source in the French president’s Cabinet, said the obstacles included the fact that France “does not want in any case to give up part” of its stake in EADS.

The governments of Germany and France both have a 22.35 percent hand in EADS, which unites space and defence interests alongside Airbus airliners

The privately held BAE Systems has stated as a condition of the tie-up, presented as a merger, that the two governments withdraw their stakes in the new entity.

When contacted by AFP, the Elysee presidential office on Sunday evening declined to comment on the report.

The German newspaper also said, citing an unnamed top official in the French government, that Paris would remain however “fundamentally open” to the proposed tie-up, but would rather be prepared to cut back its participation in the new company, though no lower than a 9 percent stake.

For the German government, the main objective is “balance within the new organizational structure” of the group which would be formed by the merger, Handelsblatt said.

According to British market rules for mergers, the two companies have until Oct. 10 to conclude their negotiations or abandon the tie-up. They can also ask for a time extension, but both sides have so far rejected that option as they want to quickly reach a deal.

The proposed tie-up announced by the two groups on Sept. 12 would change the landscape of the global aerospace industry, creating a broadly based competitor to US groups, notably Boeing, with the ability to develop a big presence in the North American market.

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