Markets: Defence giants still seeking backing for £60bn merger plan

By PETER RANSCOMBE
Published on 16/09/2012 00:00

TAKEOVERS in all their various shapes and sizes are likely to remain a key focus for the markets this week, ranging from the giant merger between defence contractor BAE ­Systems and Airbus owner EADS all the way to Irn-Bru maker AG Barr’s reversal into Pepsi bottler Britvic.

BAE, which owns the Govan and Scotstoun shipyards on the Clyde and which is assembling the Queen Elizabeth-class aircraft carriers at Rosyth, stunned the market last week with news of its proposed tie-up with Netherlands-listed peer EADS.

BAE chief executive Ian King and his EADS counterpart, Tom Enders, hit the phones on Friday to reassure investors following falls in both firms’ share prices as analysts began to question the thinking behind the merger.

Gaining political support for the tie-up will be key and both men will be working hard to woo governments in France, Germany, the Netherlands and the UK in order to gain backing for the deal, which would create a £60 billion behemoth.

At the other end of the scale, Barr is due to publish its interim results a week tomorrow and some City watchers think we could be entering a key week during which chief executive Roger White and his opposite number at Britvic, Paul Moody, will be frantically working to hammer out a deal.

When the £1.4bn all-share merger was unveiled earlier this month, all the talk was of a rival bidder riding in to spoil the party.

But some analysts have questioned which firms would have the appetite for such a move, with Pepsi unlikely to want any private equity players taking over one of its ­bottlers, while drinks giant Diageo – Scotland’s largest whisky producer – is thought unlikely to take part as it is ­focusing on a possible bid for tequila maker Jose Cuervo.

WEEK AHEAD:

Monday: Allergy Therapeutics, Iofina, Networkers International

Tuesday: Debenhams, Galliford Try, Wilmington Group

Wednesday: Asos, French Connection, Origin Enterprises, Redrow, Smiths, Swallowfield

Thursday: Imperial Tobacco, Moss Bros, Ocado

Friday: Asian Citrus Holdings, MJ Gleeson Group, Oxford Catalysts Group, Toumaz