Germany threatens to scuttle defense merger

German lawmakers said they could block a planned merger between European companies BAE Systems and EADS after EADS CEO Tom Enders addressed the parliament Wednesday.

Kerstin Andreae, a member of the German parliament's economic committee, said lawmakers were raising questions over whether the merger should proceed due to disagreements between the government and EADS, the Guardian reported.

"More questions were left open than answered," she said. "There are disagreements between the government and Tom Enders on the question of the valuation of the golden share,” referring to state holdings in the companies.

German Deputy Economy Minister Hans-Joachim Otto told the committee where Enders testified in a closed session that it’s “not just a question of how but whether” the merger should occur, according to Bloomberg News.    

German officials questioned the proposed 60-40 ratio to split control of the company, as they say EADS’s 60 percent share should be higher to reflect the proper size differential between the two.

While there are U.S. national security issues for the companies in the proposed BAE-EADS merger, their primary goal is to get the British, French and German governments to sign off on the deal. Germany has a stake in EADS through Daimler AG, and France has a direct stake in the company, according to the Guardian.

If the BAE-EADS merger goes through, the combined entity of about $45 billion would be the largest defense and aerospace company in the world.

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