Senior members of the U.K. government have told the Sunday Telegraph that the EADS “merger” with BAE could be challenged in Parliament. The deal is already controversial because it might create a new monopoly in parts of the defence and aerospace industries due to BAE’s position in defence and EADS’s in aircraft design and manufacture . That fact could also cause opposition with the U.S. government, which may want to bolster the positions of American companies which include Northrup Grumman (NYSE: NOC), Lockheed Martin (NYSE: LMT) and Boeing (NYSE: BA).

The Telegraph:

BAE has been given a list of “red line” issues focusing on UK defence contracts. The fact that such a list exists will increase concerns that the deal could hit insurmountable political hurdles and not be completed.

And,

there are also concerns that 10,000 jobs connected to the EADS Airbus operations in Bristol and north Wales could be put at risk by the merger as the new headquarters of the defence giant is likely to be in France and the new chief executive is set to be Tom Enders of EADS

National interests appear to be a powerful incentive to block the deal both in the case of the U.K and U.S.

Douglas A. McIntyre

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