By Pierre Briançon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
When EADS and BAE went to the French government with their merger project back in July, they were greeted “as if by a Parisian waiter smoking on the pavement, who makes sure patrons understand they’re not welcomed”, says one investment banker involved in the talks. Not that Paris was opposed to the deal. But it made for an unexpectedly important decision to take at a time when the new socialist government’s energy was focused elsewhere.
OCT 9, 2012
9:50 PM UTC
There have been few mergers over the years which can truly be considered a success other than in superficial terms. Takeovers can work when commercial or financial discipline needs to be brought to bear on a failing target or when an industry needs to thin down and the best bits can be kept in a business with sufficient scale.
Academic studies and stock market results show mergers generally destroy capital and skills. Failures can be all the more sever when dealing with businesses in highly complex industries where established patterns of working might take years to change or integrate.
So why do these two sets of management want it – the easy life! They are each under financial stress and want to hide from reality.
Why do governments want it? Probably a good helping of naivety and gullibility but in the case of the Germans and French and much of the UK political class, the prospect of creating an uber-business for pan-European defense production makes them salivate. It will help them destroy the ability of the UK to have independent forces and advance their cause of an EU superstate.
This is very worrying indeed for those who favour an independent, democratic Britain.Posted by EppingBlogger | Report as abusive