UK defence group BAE and aerospace firm EADS in controversial merger talks

Britain’s defence industry being supported by a foreign business has investors questioning the benefits...

13:50 15 September 2012

The British defence contractor BAE Systems is under pressure over its recent talks with aerospace company EADS, who also own of Airbus, as they negotiate a £30billion merger to support UK defence.

 

Controversy has arisen as some people are concerned over EADS being part owned by France, Germany, and Spain, and investors are warning this could harm future business rather than support the UK defence industry.

 

A decision is yet to be reached, with the chain of events beginning in April when BAE Chief Executive, Ian King, and EADS boss, Tom Enders, met to discuss ways to improve the Eurofighter Typhoon project.

 

Reportedly, former Defence Secretary, Lord Reid, has expressed there are issues which are to be overcome. He told the Today programme he thinks the government has a lot to consider and that it is a "geo-strategic case".

 

According to the BBC, some believe there will have to be a type of ring-fencing concerning BAE business in the U.S. if the merger plan is confirmed.

 

Some insiders have said that they believe PM David Cameron is supportive of merging the two bodies, as reported by The Telegraph.

 

It is understood that shares in BAE fell by at least 10per cent, with investors airing their concerns over the merger deal.