ATTEMPTS TO create a European giant to rival Boeing of the US collapsed yesterday, amid investor anger at the handling of a multibillion-euro deal that would have transformed the world’s defence and aerospace industry.
Government officials in London, Paris and Berlin blamed each other for not backing the €36 billion tie-up between BAE Systems, the UK’s defence champion, and EADS, Europe’s biggest civil aerospace group, while investors accused BAE of having a muddled strategy that threatened shareholder value.
There were suggestions that Angela Merkel, Germany’s chancellor, vetoed the deal on Tuesday morning. But one senior Berlin official said that London and Paris had never resolved a dispute over what the size of the French state shareholding of the enlarged company should be.
A senior government official told the Financial Times that Dr Merkel telephoned François Hollande, France’s president, demanding a “quick decision” by the governments either to extend talks or pull the plug on the deal. Another person close to the negotiations said the chancellor bluntly told Mr Hollande the deal was off.
Invesco Perpetual, BAE’s biggest shareholder, criticised the attempt to join a defence company with an aerospace group.
Another top 10 BAE shareholder said: “We feel there has been far too much emphasis on looking for deals when shareholder value and returns can be created by developing the defence business.”
Shareholders said that they were not looking for changes in top management at this stage, although a failure to provide a clear strategic direction would probably put pressure on both Ian King and Dick Olver, BAE’s chief executive and chairman.