Under-fire plan for BAE-EADS tie-up defended

BAE Systems chief executive Ian King
BAE Systems chief executive Ian King
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BAE Systems chief executive Ian King and his counterpart at Airbus-owner EADS, Tom Enders, yesterday defended the controversial merger between the two companies, describing it as a deal “born of opportunity, not necessity”.

The move came as a French shareholder in EADS warned that the terms of the deal were “unsatisfactory” and a source close to the UK government cautioned that it could block talks unless the combined group’s defence business was to be based in the UK.

Conglomerate Lagardere has demanded a review of the deal, adding to pressure from French and German governments, with talks moving closer to a deadline of 10 October to decide whether to proceed and announce detailed plans.

“Despite the industrial and strategic potential attributed to it, this plan has not yet demonstrated that it was creating value for EADS,” Lagardere said. “Lagardere invites EADS to proceed immediately with an indispensable review of the plan.”

In an article jointly written by King and Enders, the two executives said there were a number of misconceptions circulating about the deal, but they stressed that, because discussions with several governments were continuing, they were “not yet in a position to tell the full story and explain the significant benefits of the combination to our shareholders, employees, and other stakeholders”.

Shares in BAE, Europe’s largest defence contractor, closed up 2.1p at 327.2p.