Top BAE investor Invesco attacks 'logic' of merger It takes issue with the BAE board on the strategy behind the link, the structure of the new organisation and the financial implications. The hard-hitting critique reflects Invesco's longstanding reservations about BAE's acquisition policy but the decision to go public adds to the growing tide of criticism from leading investors who claim they have been left in the dark. Invesco says it does not understand the "strategic logic" behind the deal. It believes the link would materially jeopardise the group's "unique and privileged" position in the US defence market and says it has been unable to identify any corresponding benefits to offset the threat. The level of state shareholding by France and Germany in the combined group is also exercising Invesco. It says it is "very concerned" about stake that will be held by the two governments because it would damage commercial prospects, particularly in the US, and result in governance arrangements "driven more by political considerations than shareholder value creation." Invesco is also concerned about dividend prospects, pointing out that BAE's current yield of 5.9pc is more than double the EADS yield of 2.3pc. The failure to provide any guidance about the dividend outlook beyond next year has Invesco worried that shareholder returns will have a low priority in the new group and leave BAE investors facing a "significant drop" in income. The growth potential emphasised by the new group does not impress Invesco. "While growth is important it should not be at the expense of cash flow and returns which are even more important drivers of long term value creation," the statement adds. Invesco, a BAE shareholder for more than 20 years, maintains that BAE is a strong business with distinctive positions in the global defence market, particularly in the UK and US and "good stand alone prospects." David Cameron is ready to hold talks with the French president, Francois Hollande, and the German chancellor, Angela Merkel, to settle an agreement between the three governments. Such a move would pave the way for BAE Systems to ask the Takeover Panel for an extension to the Wednesday deadline for a deal to be either agreed or abandoned. The political threat to the deal is being reinforced by complaints from some BAE investors that they are being kept in the dark about the merger. Officials will today make a fresh attempt to resolve the headquarters issue in another tripartite video conference call. An attempt on Friday to settle outstanding issues went smoothly until Lars-Hendrik Roller, Ms Merkel's chief economic adviser, stunned British and French negotiators by calling for the scrapping of plans to locate the combined company's military headquarters at Farnborough and civil aircraft headquarters at Toulouse. He called for a single base in Munich to be set up instead. Efforts were made over the weekend to find a solution but if today's talks again end in failure BAE will ask Mr Cameron to intervene and raise the issue with his French and German counterparts, in what is being described by insiders as "make or break time." Philip Hammond, the UK Defence Secretary, said on Sunday that Britain would block the proposed merger if key "red line" priorities are not met. "We want to see this company ... prospering as a commercial business, focussed on doing things that are right for the business, not beholden to or controlled by any one government," he told BBC radio. It is not necessary to have no French or German government interest in the company. It is necessary to reduce that stake below the level at which it can control or direct the way the company acts," he said.