09 Oct 2012 By Graham Ruddick - telegraph.co.uk
The £28bn mega-merger between BAE Systems and EADS is on a knife-edge as the aerospace and defence companies mull whether to scrap the deal due to opposition from politicians and investors, or request an extension to their Takeover Panel deadline.
The boards of BAE and EADS met separately on Tuesday night to determine their next move after a day of political wrangling between the British, French and German governments.
Sources close to the companies said it is “50/50” whether an extension will be requested.
Tom Enders, chief executive of EADS, and Ian King, the boss of BAE, must consider whether enough progress was made in talks between France and Britain about the level of state ownership in the enlarged company.
The Takeover Panel has set a deadline of 5pm on Wednesday for the companies to decide the future of the deal, but a statement could be made before the stock market opens.
The future of France and Germany’s stakes in EADS has emerged as a breaking point for the deal, with Britain opposed to the two countries potentially holding a combined 27pc of BAE-EADS when it would have no stake.
However, Philip Hammond, the Defence Secretary, and Jean-Yves le Drian, his French counterpart, are understood to have reached an outline agreement at Nato talks in Brussels whereby France would be able to acquire more shares in the company above its proposed 9pc holding but that the level of state ownership would be capped.
Speaking after the talks, Mr Hammond said: “I think the companies now have a very clear understanding of the positions and the red lines of the governments involved.”
Mr le Drian said: “We had made a lot of progress, I think, but have we progressed enough? That is up to those who initiated the project to say.”