PM holds talks with France and Germany over proposed BAE/EADS merger

The Prime Minister spoke to President Francois Hollande by phone yesterday, having discussed the merger with German Chancellor Angela Merkel on Friday evening, said Downing Street.

Although the merger is a commercial deal, the approval of all three governments in London, Paris and Berlin will be needed if it is to go ahead. The British Government holds a ‘golden share’ in defence contractors BAE, which means it can veto any merger or takeover of the company.

BAE, which has 1,100 staff at Brough and a training academy at Doncaster’s Robin Hood Airport, has said that the planned tie-up with Airbus owner EADS will form a “world-class” company in its sector, with combined sales of £60bn and about 220,000 staff. The merged group would employ about 48,000 in the UK alone.

The deal, which will give BAE access to the lucrative civil aviation market, will leave BAE shareholders with 40 per cent of the combined group.

The two companies have until October 10 to finalise terms under Takeover Panel rules, but there was speculation yesterday that they may request an extension to the deadline.

Mr Cameron’s official spokesman declined to give details of the PM’s discussions with his French and German opposite numbers when he addressed reporters at a regular press briefing in Westminster. The spokesman said: “Given the nature of the companies’ activities, the Government will clearly have some involvement and we need to ensure that the UK’s public interest is properly protected.

“We are working with the companies to ensure that that is the case.

“We are also talking to people in other countries about this. Clearly, the companies have activities in all three countries and you would expect us to stay in close contact on it.”

Mr Cameron has not yet spoken to US President Barack Obama about the merger proposal, said the spokesman.