BAE Systems’ merger with EADS faced further obstacles a day before the deadline for a deal to be either agreed or abandoned.
The company’s biggest shareholder has outlined “significant reservations” about the proposed £28bn tie-up with Airbus’ European parent.
Invesco Perpetual, which owns more than 13 per cent of BAE, said it does not understand the strategic logic of the proposed merger and it is worried it will materially jeopardise BAE’s “unique and privileged position” in the US defence market.
Invesco does not own enough shares to halt the deal but the intervention of the giant fund manager is another blow to the merger, which is mired in political wrangling.
As a result of the politics, it is expected that the two companies will ask for an extension to the deadline set by the independent Panel on Takeovers and Mergers.
BAE and EADS face a number of hurdles if the deal is to go through, with France and Germany keen to keep significant equity stakes in the merged group and the Germans demanding the headquarters be in Berlin.
Fylde MP Mark Menzies said today: “From the outset I have been very clear that my number one priority during these merger discussions is to ensure that, whatever happens, BAE Warton remains the headquarters of Military Aircraft Solutions for the company. We also need assurances about state shareholding and the levels of influence the French and German Governments may have on a new company, should the merger take place. Overall I remain supportive if these conditions are met but I know there are many obstacles to overcome.”
And PM David Cameron is facing a major Conservative rebellion after 45 MPs signed a letter calling on the Prime Minister to veto the deal.
Defence Secretary Philip Hammond warned France and Germany must slash their stakes in EADS if the Government is to agree the merger. He said it was a red line issue and the Government would use its golden share in BAE as a veto unless its conditions were met.