Merkel Wants 15% of EADS outright

Germany spoiled the wedding party of EADS and BAE Systems by vetoing their proposed merger.

The combination of the British and European defense and aerospace companies balanced by EADS's commercial business (think Airbus) would have given American competitors a bulked up rival. EADS was looking at the deal as a means of reducing political influence on the firm only to have that political intervention do the deal in.

Germany now makes it clear that it wants an equal say with France: that means the government of Germany wants an equal say with the government of France.

European corporate structure is not for the faint hearted. Consider the complicated structure of EADS. EADS is the holding company which owns Airbus and the defense businesses. It is owned by various national entities. The German ownership has been in the form of Daimler-Benz's control of a 22.5% interest: Gerrit Wiesmann reports in the Financial Times today (10/24), "Daimler officially controls 22.5 per cent of EADS, although it sold a 7.5 per cent stake to the Dedalus group a few year ago to raise funds for its core business. The group, which also includes Allianz, Deutsche Bank, Goldman Sachs and Morgan Stanley, has the right to sell back its stake to Daimler in the middle of next year."  The German government has been interested in buying all or part of this interest. The proposed BAE Systems-EADS merger moved Berlin into action. Wiesmann reports that "The German government is bringing forward [its] purchase of 15 per cent of EADS."