EADS-BAE Plans Put Merkel Under Pressure

The planned merger of the British defense contractor BAE with the aircraft maker EADS is putting Germany’s chancellor under pressure. If Angela Merkel consents to the deal, she will jeopardize jobs in the high-tech industry. But if she refuses, she will endanger future of the aerospace giant (…..) Since the previously secret plan became public last week, it has been clear a bitter behind-the-scenes battle over the future of European defense industry has been raging for weeks. There is much at stake: well-paying jobs, high-tech industry plants, future-oriented know-how, billions in revenues, most of all, prestige. The mega-deal affects governments in Berlin, Paris, London and Washington. Although all four are close allies, national interests trump other loyalties in the conflict. Enders, for his part, is trying to reduce government influence so he can run his company as efficiently as possible. Situation is complicated by the fact the sensitive information was leaked too early. Under British financial market rules, politicians and industry leaders will have to come up with a solution within 28 days of the plans becoming known to markets, in other words, by Oct. 10. The Germans very quickly assembled a task force consisting of personnel from the Chancellery, the German state-owned development bank KfW, Finance Ministry and the Economics Ministry. The most important member of the group is Lars-Hendrik Röller, Merkel’s economic adviser and head of the Economic and Fiscal Policy department at the Chancellery. It is still unclear what government will ultimately decide. Originally, the Chancellery planned to wait until November before wading into the takeover battle with a concrete negotiating strategy. What Merkel fears even more than losing power in relation to the company is the loss of valuable high-tech jobs, which could move to France or the United Kingdom as a result of the deal. That’s the last thing she can use as campaigning begins for German general election in 2013. There is much at stake for Merkel in this poker game. As bait, Enders presented her with a “golden share,” which would enable the German government to block a hostile takeover from strategically problematic countries. The Chancellery currently plans to guarantee this form of influence in the long term by buying up EADS shares through state-owned KfW Bank, at a cost to German taxpayers of at least €2 billion. “Golden” share, on the other hand, is free, at least according to EADS offer. The group’s lobbyists are currently on the move in a tireless campaign to point out dangerous consequences of a failed deal. Other defense contractors have already been circling the British company like vultures, including Rolls-Royce and American competitor Northrop Grumman, which reportedly approached the British defense contractor a few months before Europeans. Merkel and Enders first discussed deal in July, but insiders say that the chancellor was not particularly pleased about it. Some of her reserve can be attributed to Tom Enders’ personality. No one, not even Enders himself, would credit him with diplomatic skills. He polarizes people whenever he turns up in Berlin (…..)

Link: http://www.spiegel.de/international/business/eads-bae-merger-plans-put-merkel-under-pressure-a-856446.html 

Acerca de ignaciocovelo
Consultor Internacional

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