* Germany defence minister joins calls for more time
* Head of EADS unit Airbus says Oct. 10 date must be kept
* Request would be sign of progress in the talks
* German, French, UK ministers held "constructive" talks
By Tim Hepher and Matthias Blamont
PARIS, Sept 27 Europe's EADS rejected
calls on Thursday to allow extra time for negotiations over a
$45 billion merger with BAE Systems, as brinkmanship
looked set to play a key role in politically complex plans to
create a new defence giant.
Fabrice Bregier, head of the Airbus planemaker unit and part
of the inner circle running Franco-German-Spanish EADS, was
quoted as saying it was crucial to stick to the date set by UK
regulators under rules designed to protect investors.
"The importance is that opinions converge. The October 10
deadline may seem soon but it is absolutely necessary given the
environment," Bregier told the French daily Les Echos in an
interview to be published on Friday.
EADS and BAE are in talks to create what would be
the world's largest defence company. But their efforts have
become snagged on differences over control between France and
Germany while there are also political concerns about jobs.
German Defence Minister Thomas de Maiziere joined France in
pressing the companies to seek an extension of the UK deadline
in order to give politicians more room to bridge differences.
"Perhaps we need more time. It depends on the answers for
our questions and so I think we need more time," de Maiziere
told reporters at a meeting in Cyprus.
France and Germany want to safeguard their influence over
EADS while special arrangements will be needed to ringfence
sensitive operations, including work BAE does in the United
States and on Britain's nuclear submarines.
In the past two weeks, investors uncertain about the deal
have stripped 4 billion euros from the value of EADS,
illustrating the risk Chief Executive Tom Enders could face if
he agrees to expose the stock to a further month of negotiation.
BAE shares have also shed their initial gains and analysts
warn they may struggle to carry investors with them beyond Oct.
10 if the talks show no signs of progress.
Yet with two weeks left, EADS and BAE have little incentive
to seek an extension to the deadline.
Softening the deadline would ease pressure on Europe's
politicians to come to an agreement acceptable to the companies
while placating U.S. and UK fears of political interference.
For these reasons, experts say a bid for an immediate
extension is unlikely unless there is progress. But if there is
stalemate running up to the deadline, leaders of both companies
could play hardball and decide to abandon the plan.
"It's normal that different points of view are expressed.
Especially in an operation where states have strategic interests
to preserve," Bregier told Les Echos.
"This kind of operation requires rapid decisions and it's
not EADS or BAE management pushing, it's the markets and the
clients, who want to know what the future of the group will be,"
he said adding that the current merger plan included guarantees
to the United States covering its security concerns.
INFLUENCE AND TRADE-OFFS
The merger to create the world's biggest defence and
aerospace company would dilute the influence of the French,
German and Spanish governments in the company, prompting
negotiations over their roles in the future.
German reservations include how to safeguard jobs and
protect the merged firm from any future hostile takeover, a
government document obtained by Reuters on Monday showed.
On Wednesday, a French government source said France would
want to retain certain rights, as well.
EADS is standing firm, reiterating its "intention and
current expectation" to provide further clarity by that date.
Technically, extensions to the UK stock market deadline are
relatively simple and are usually granted, lawyers say.
Yet in classic European negotiating style, as seen on issues
from farm subsidies to national bailouts, talks generally go
down to the wire.
Raising the threat of a missed deadline, or demanding it be
kept, is a tried and tested tactic in the brinkmanship so often
seen among the 27 nations of the European Union.
De Maiziere called talks with his British and French
counterparts on Wednesday evening "constructive".
"This is a complex situation, there are a lot of questions
and conditions, nothing has (been) decided yet ... We will keep
in contact," he said.
European governments all face severe spending pressures, but
a stand-off between France and Germany over control of EADS is
seen as the bigger roadblock, rekindling a climate of mistrust
which set in during management rows from 2005 onwards.
France holds a 15 percent stake in EADS and wants to retain
its right to influence group strategy. Spain owns 5 percent.
Germany is not a direct shareholder but sees the transaction
as a chance to enlarge its influence. At the same time, EADS and
BAE are pressing for less political influence.
Airbus's Bregier said he did not see the issue of German
state participation being an issue in the talks and did not see
any reason why measures could not be taken to ensure a balance
with France, whose government would end up with a 9 percent
share in the new group as plans stand today.
Signs of discord first emerged at the weekend when Reuters
reported that France appeared to rebuff German proposals for a
EADS and BAE have said they will offer the governments of
France, Germany and Britain a "special share" in the new
company, allowing them to block any future hostile takeover, but
are determined to prevent any meddling in management decisions.