Berlin and Paris unite on EADS holdings Germany and France have agreed a common position on the tie-up of EADS and BAE Systems, insisting on controlling large equity stakes in the proposed €34bn aerospace and defence giant but signalling a willingness to give up some of their current veto rights. Officials in Berlin and Paris said the two had hammered out shared terms for accepting a deal which would now have to be negotiated with the companies and the UK government. Their conditions suggested considerable obstacles remain. However, the chief executives of BAE and EADS have warned that the two states must wield no more power than the average shareholder over the group. One senior French official said that neither the French nor German side was yet comfortable with the proposed 60:40 value split between EADS and BAE, indicating further tension with BAE investors determined not to budge on the issue. The two governments want to maintain influence over the new company by holding direct equity stakes of 9 per cent. They also want Daimler, the German carmaker, Dedalus, a consortium of German banks, and Lagardère, the French media company, to retain their shareholdings and are demanding pre-emption rights on future sale of these stakes. "The French idea is that the governments and Lagardère and Daimler would hold 27 per cent [of the new company] and thus have the power to influence decision-making," said one person briefed on the deal. The two countries are also demanding assurances of continued German and French presence on the board. French officials added that the retention of the group headquarters in Toulouse was a deal-breaker. Berlin wants Germany to get one of the new company's decision-making centres, while the UK insists the defence headquarters must be in London. Meanwhile, in words that appear to indicate that the Franco-German position would scupper a deal, Ian King, head of BAE, and Tom Enders, EADS chief executive, maintain in an article for the Financial Times that a combined EADS-BAE would end the control Paris and Berlin have had over EADS. But there appears room for negotiation. London is in an important, but sensitive position. So far, UK government officials close to the discussions have said a blocking stake by the other two countries would be unacceptable, but they have also hinted there were still ways to find common ground.