Secrets could be EADS/BAE deal-breaker

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Secrets could be EADS/BAE deal-breaker

Secrets could be EADS/BAE deal-breaker
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America’s defence industries have not taken long to respond to the proposed EADS/BAE merger, via a former US undersecretary of commerce who warned they would expect a “firewall” on technology and data from their British partners.

Britain’s BAE says it accepts certain projects will not be included in the formation of the world’s biggest aerospace company, a 38-billion euro deal.

Franco-German EADS is reportedly set to offer each government, along with Britain, a veto right and job guarantees in an attempt to win approval for the deal, above all from a reticent Germany that is keen not to see its influence in the company diluted.

Mario Mancuso, a former senior advisor on the Committee on Foreign Investment in the US which decides on national security clearance for such deals, said the influence of the French and German governments meant the US government would require “enhanced mitigation measures” beyond those currently demanded of BAE.

Several legal experts said the merged company would also have to cede operational control of its most sensitive US defence contracts to a proxy board of three Americans. A European headquarters would be “less trusted” by Washington.

This would mean the European parent handing its US assets to three people, having limited veto rights over corporate decisions, and with no guarantee any recommendations it made would be accepted.

Yet America matters to any future EADS/BAE giant, and it cannot afford to be shut out of its market. It is believed the right proxy executive can be found in this sort of arrangement.

However some have commented that this sort of consolidation of the European aerospace/defence sector has been talked up by Washington for years as it sought to encourage its European partners to provide more of their own defence.

EADS chief executive Tom Enders insists the deal will end the right of Paris and Berlin to interfere in any case.