BAE - EADS merger?

[Oberon]

According to a side column on todays issue of The Times, there's a last-ditch attempt today to create a merger of BAE and EADS, creating the biggest aerospace and defence company in the world.
The shareholders seem dubious about it, and Leon Panetta wants to keep long term contracts with BAE in place in case of a merger, but our Defence minister, Hammond seems quite in favour of it, and the two will be talking at todays NATO conference apparently.
If this merger goes ahead, the result will certainly be a heavyweight on the global arms trade.

http://www.bbc.co.uk/news/business-19879916

[Skybird]

Why do we not just dismantle "sovereign" :har: national states and give people a list of corporations to vote for? That way everybody could take pride in being owned by companyx bosses who no longe rmujst spend billions in lobbying in parliaments and ministries. For the people it would make no difference, but the bosses would be richer ion total - by the bribes they have saved.

[Jimbuna]

What appears to be stalling the process is the fact BAE's largest singe shareholder and jointly almost one third of the total shareholders are worried about the value of their investments plummerting in the future considering all the conflicts currently ongoing globally.

[Skybird]

No, the issue is nations' influence. France demanded 13% of the shares therefore, Germany insisted on keeping the balance with France and therefore also insisted on 13%, but Britain does not accept to have any of the two more than 9%. This according to the Frankfurter Allgemeine Zeitung which also says that the deal is practically dead by now.

Goold. Weapon industries should not be so powerful and huge that they have a decisive influence on the forming of foreign politics and can influence the government.

[Skybird]

The merger ha snow formally collapsed, both EADS and BAE said the deal will not longer be negotiated. Germany blocked a decision that would have required to accept dominant British influence and demanding Germany and France to significantly reduce their own political influence in the new mega-corporation. Germany says that in EADS in its current form, productivity, value production and political influence of Germany, France and Spain is better served than in a merged company with BAE.

EADS and Airbus Industries are traditionally seen as being shouldered by France and Germany in the main. Airbus is a French "invention" and France managed to already reduce German influence in favor of French influence int eh past years. It seems the German side was not willing to accept a further reduction of the say it could have in related decision-forming.

Britain would have liked the merger, since London stockmarkets were humming in expectation and Britain could have hoped to bypass the Germans and dominate France in the control of such a corporation's decisions.

I am surprised that the Germans this time stood up and had the spine to say No to this "European" project. From German perspective, the denial of Germany to accept the British demands is only logical and natural.

The EADS chief is not happy though, since he wants to free the military business from controlling political influence as much as possible. Which of course is extremely dangerous. decisions of military relevance should not be left to economic entrepreneurs.

Whether such power to form military decisions is better served in the hands of our politicians, is something different. In the end, thanks to billions-heavy lobby-work and tight personal relations between businessmen and politics, it probably leads to the same results anyway.

[Jimbuna]

The actual factual reason was the German governments insistance on wanting a controlling element that would have allowed them to transfer work/production over to Germany in the future.

BAE is the largest foreign owned company supplying the USA and Germany wanted all the cake.

The British government was prepared to drop said influence but clearly Germany wasn't....they're eventually going to have to repay all that money they've wasted on Greece and probably thought this was the goose that would lay the golden egg.

[Skybird]

No, Jim, Germany already had seen job losses due to a restructuring at Airbus over the past years that was initiated by the French. EADS is currently led by the German half of the former French-German leadership duo, and although German, Enders actually was in clash with the German government, wanting it to step back even more and trying to sell this demand to the French side as well so that EADS would very well be free to dictate in the future to government the conditions of future business operations by EADS, including to make them pay even more, and externalize even more risks to public tax payers. It is to ber assumed that he also wants a lowering of arms control for exports. BAE on the other hand tried to secure for the British a dominant position in any business-related and security policy-related decision making, to reach slight advantage over the French, and bypass the Germans more or less completely by marginalizing them. I assume the German resistance was underestimated when having seen how easily Paris managed to push Berlin into giving way for French demands at Airbus in the past years. Germany has given up several key technology fields in the past, namely independent aircraft manufacturing (the French had Airbus, Britain had BAE), and nuclear technology for a Germ,n market (Siemens, and others). It seems Berlin was not willing to lose even more technological key areas, and jobs as well - every merger of this size costs jobs, and costs money. Also, most if not all mammoth mergers in the past have gone wrong, I think of Daimler especially. Next year is a German election year - having sold German jobs as EADS away and having lost influence at EADS and in security policy making as well, probably was a concern in Berlin as well. Fro what I read and heared today, nobody in Berlin wanted this merger, and all politicians are pretty much relieved that it got prevented. While the London stockmarket hoped for the merger, the German did noit - todays declaration of failure made several tech indices going upwards, so workers at EADS and German shareholders both are united in relief that the merger failed. Don't know what the London indices said about the story today.

The double-leadership at Airbus does not go smooth at all (France, Germany). Imagine how unsmooth it would have become with three major heavyweights rivaling at the top for influence. In the end, I think, this merger would have led to a dictating of costs and prices for which the taxpayers would have had to pay - again.

[Jimbuna]

TBH, after reading this article it's hard to know what to believe :hmm2:

http://www.guardian.co.uk/business/2012/oct/10/bae-eads-merger-off-political-concerns

[Skybird]

I think that British and continental interests were extremely different in this.

Monsters like this simply have too much weight as if they would need to play under supervision of policy.makers. Such a big monster instead tends to tell politicians what policy to make. That already is a bad thing in itself that leads the basic idea of democracy ad absurdum. When it is a weapon-maker, then it becomes a humanitarian disaster. Weapon-makers have interest in selling weapons. <- This. And not one bit more. Having moral scruples in doing so, creates no profit.

[Oberon]

I think British and continental interests have rarely seen eye to eye since the 1960s. We flit between Europe and the US as our closest friends and have been unable to choose either.
I fear one day this may bite us in the arse.