Bonn favours defence merger

THE German government has warmly greeted the plans for a pan-European defence and aerospace giant submitted last week by British Aerospace and its European partners.

Norbert Lammert, transport and aerospace minister in Bonn, said the German, French and British governments would move swiftly to follow the merger timetable proposed by BAe, Daimler-Benz Aerospace of Germany, Aerospatiale of France and Casa of Spain.

Mr Lammert said he was convinced the merger would happen, describing it as "an irreversible process. It is no longer a question of whether it will happen, but how it will happen. Our goal is a merged European group capable of taking on its American competitors."

A trilateral conference of the British, French and German governments will take place in London on 21 April to solve the key political problems, withSpain joining in May if key agreements are reached.

The document submitted by the four states sets out the main areas of agreement and dispute. The members agree on creating one fully merged, quoted aerospace and defence company. They concur that big financial benefits and synergies would accrue and insist the company should be run for the benefit of shareholders.

The key dispute is over the French government's ownership of Aerospatiale and the political influence it could exert. BAe strongly opposes block voting by government shareholders. Mr Lammert insisted last week that the April conference would address this issue.

Other problems should be easier to resolve. Because it is a publicly quoted company, British Aerospace would not be able to participate in a slow transition to merger as some propose. It is also unclear whether the group would embrace regional aircraft or would include Dassault, the French defence group. However, the Airbus civil aircraft consortium will be included in the merger if it goes ahead.

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