• France's news in English

Germany scuppers EADS-BAE merger

AFP · 10 Oct 2012, 14:18

Published: 10 Oct 2012 14:18 GMT+02:00

Facebook Twitter Google+ reddit

Talks on the potential €35 billion ($45 billion) mega-merger, which BAE Systems abandoned on Wednesday, were blocked by Germany, a source close to the matter told AFP.

In public, officials stressed that Paris, Berlin and London were striving for a common line, but behind the scenes, negotiations appeared to have become much more strained.

The often turbulent relations within EADS between France and Germany were complicated this time by the involvement of Britain, with all three European powers holding a veto right over the planned merger.

"The Germans are worried that there will be a duopoly with Toulouse (Airbus headquarters in southern France) in charge of civil matters and London for defence," said Henrik Uterwedde, deputy director of the German-French Institute in Ludwigsburg, before the talks collapsed.

"They want a fair share of the pie," he told AFP.   

Since the potential merger was announced last month, Berlin has repeated almost daily the official line: they are in talks with all players and the deal is so complex that no public statements would be made before a final decision.

But German Economy Minister Philipp Roesler also insisted that "Germany has to preserve its interests" while recognising that this merger was an "undoubted opportunity."

With possibly less than a year to go until national elections, Berlin was sensitive to the need to protect its factories and tens of thousands of EADS-linked jobs in Germany.

There are sizeable Airbus assembly plants in Bremen, in the north of the country, as well as factories building the Eurofighter combat plane in the southern state of Bavaria.

Berlin was also at pains to defend its research and development capabilities and feared being relegated to a mere cog in a wider machine whose main wheels were turning in Paris and London, analysts said.

The head of the European Aeronautic Defence and Space company Tom Enders, a German, already ruffled feathers in Berlin government circles by shifting the group's headquarters to Toulouse, when it was previously split between Germany and France.

Berlin wanted to revisit this decision, a demand considered "unreasonable" by EADS since "the choice of headquarters is an economic decision."

Enders sought to calm tempers by pledging, in the country's most widely-read daily, Bild, that he would consider job guarantees if the merger went ahead.

"I am so convinced of the merits of our project that I am prepared to talk about attractive job and headquarters guarantees that I could not consider for EADS (on its own)," Enders said.

Others on the German political scene were concerned that Berlin would lose control of its say in the defence operations of the group.

"My fear is that the defence activities of the firm will be divided between France and Britain," said Martin Lindner, parliamentary vice-president of the Free Democrats, junior coalition partners in the German government.

Story continues below…

"I do not want us to be completely dependent on outsiders for such a key industry," he told the Frankfurter Allgemeine Zeitung daily.

Analyst Uterwedde said that the deal was always about politics rather than economic or commercial considerations.

"EADS is and remains a political company," he said.    

Writing before the final collapse of the deal, newsweekly Spiegel, however, pointed to the human side of the failed merger.

"What happened between the three European countries last week is nothing short of a political-economic earthquake -- a seismic tremor that potentially puts thousands of jobs at risk," said the magazine.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Kidnapped Riviera millioniare found tied up in Nice
Photo: AFP

Head of luxury Cannes hotel found alive after by kidnapped in Nice on Monday.

Paris landlords still charging illegally high rent prices
Photo: Panoramas/Flickr

... and it's tenants in the smaller apartments that get hit the hardest. Could you be paying too much?

France takes baby steps to make life simpler
Photo: AFP

... including extending the ridiculously short time limit for registering a new baby.

IN PICTURES: Calais Jungle camp goes up in flames
All Photos: AFP

Migrants leave behind a scorched camp as they are moved to locations across France.

French expats in UK suffer Brexit abuse
French ambassador to the UK Sylvie Bermann with Foreign Secretary Boris Johnson. Photo: AFP

French nationals no longer feel at home in the UK, ambassador says. But Brits in France have been greeted with sympathy since the referendum.

Six to go on trial in France over topless Kate photos
Photo: AFP

The topless pics sparked fury among the royals.

France sees biggest drop in jobless rate for 20 years
Photo: AFP

Good news at last. But it's unlikely to keep President François Hollande in his job.

Calais migrants given mixed reception in French towns
Photo: AFP

Some in France have shown solidarity with their new guests, while others have made it clear they are not welcome.

Lonely Planet says Bordeaux is world's best city to visit
The fantastic new Bordeaux wine museum. Photo: AFP

After The Local France, the Lonely Planet has followed suit by urging everyone to head to Bordeaux in 2017.

Jungle shacks set ablaze and torn down as camp razed
All photos: AFP

IN PICTURES: The razing of the Jungle has finally begun.

The annoying questions only a half French, half Brit can answer
Sponsored Article
Last chance to vote absentee in the US elections
Forget Brangelina's chateau - here are nine others you've got to see
The must-see French films of the millennium - Part One
How life for expats in France has changed over the years
Why Toulouse is THE place to be in France right now
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
Swap London fogs for Paris frogs: France woos the Brits
Anger after presenter kisses woman's breasts on live TV
Is France finally set for a cold winter this year?
IN PICS: The story of the 'ghost Metro stations' of Paris
How to make France's 'most-loved' dish: Magret de Canard
Welcome to the flipside: 'I'm not living the dream in France'
Do the French really still eat frogs' legs?
French 'delicacies' foreigners really find hard to stomach
French are the 'world's most pessimistic' about the future
Why the French should not be gloomy about the future
This is the most useful French lesson you will ever have. How to get angry
Why is there a giant clitoris in a field in southern France?
French pastry wars: Pain au chocolat versus chocolatine
Countdown: The ten dishes the French love the most
Expats or immigrants in France: Is there a difference?
How the French reinvented dozens of English words
jobs available