The bosses of BAE Systems and EADS have set out their case for the proposed merger of their firms in a joint letter to UK, French and German newspapers.
The two defence firms are proposing a $45bn - £28bn - deal, but this has proved controversial due to concerns over national security and job losses.
It would create a defence giant with a 60/40 post-merger weighting in favour of EADS.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The letter, signed by Ian King, Chief Executive of BAE Systems, and Tom Enders, Chief Executive of EADS, said the time was right "to seize the moment and to create something that is even stronger and better".
It appeals for "the necessary political will and support" to create a firm that would "be able better to ride the cycles of civil aviation demand and defence spending".
"We would be a business with the scale and stability to invest more in R&D, and a force for greater competition and growth," the letter reads.
"All of this would deliver tangible benefits to our customers in each of the defence, aerospace and security worlds."
It acknowledges that jobs could well be lost, saying "clearly, there will be scope for efficiency savings when two companies of our size come together, but great benefit will derive from our ability to exploit new business opportunities".
The joint firm would replace the shareholder arrangements which currently give Daimler, Lagardre and the French state joint control over EADS.
"That would mean creating a business with governance structures which would enable it to operate in a normal commercial manner and which confers the same rights on all shareholders, large and small,' the letter said.
However, this could create problems with the German and French governments, which are keen to maintain their influence in EADS.
'We are very focused on agreeing arrangements which protect the strategic and national security interests of the governments with which we work, particularly in France, Germany, the United Kingdom and the United States, given the importance of those markets to the combined group."
EADS and BAE have already said they will offer the British, French and German governments a golden share in the new company to ease concerns over any future hostile takeovers.
A 'golden share' is a nominal share which is able to outvote all other shares in certain circumstances.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
