UK defence select committee to probe BAE-EADS tie-up

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A new regulatory hurdle has been put in the path of the proposed merger between BAE Systems and EADS after the UK House of Commons defence select committee launched a probe into the impact of the planned tie-up.

Due to hear evidence during October, the committee says if the deal was to proceed, it would "have a significant and strategic impact on [the companies'] relationships with UK, US and European governments".

"It could also radically alter the defence industrial base in these countries," it adds.

The inquiry will examine the likely impact of the merger on both the "protection of sovereign capabilities and the nature of the defence industrial base".

It will also probe the effect of the merger on the relationship with the USA "including the development of the [Lockheed Martin F-35] Joint Strike Fighter and continuing access to US technology".

Other topics under review by the committee include the possible ramifications for the UK's relationships with its European allies, the consequences for UK and joint-venture defence exports, and the thorny issue of defence procurement.

The committee has requested written evidence to be sent to it by 9 October. The following day, EADS and BAE Systems are obliged to issue a statement to the UK stock exchange detailing the progress of the merger talks. BAE has already indicated it will ask for an extension to the process if the parties are still in discussions.

If the deal goes ahead as planned it would create $100 billion turnover defence and aerospace giant. The two companies already co-operate through the MBDA and Eurofighter joint ventures.