BAE's biggest shareholder warns over EADS tie-up

This was the second shot in two days from British shores across the path of the tie-up.

In an indirect reference to France and Germany, Invesco, which owns 13.3 percent of weapons maker BAE Systems, said that it was “very concerned” that the level of state holdings in the combined group would affect its commercial position — particularly in the key United States market.

“Invesco does not understand the strategic logic for the proposed combination,” it said in a strongly worded statement.

“Invesco believes the merger would materially jeopardize BAE's unique and privileged position in the United States defense market, and has been unable to identify any corresponding benefits to offset this.

“Invesco is very concerned that the level of state shareholding in the combined group will heavily impair its commercial prospects — especially in the United States — and result in governance arrangements driven more by political considerations than shareholder value creation.”

The news comes as political wrangling between Germany, France and Britain enters a critical phase ahead of an imminent deadline for a BAE/EADS merger which would create the world's top group in the fields of civil and military aerospace.

The two firms have until Wednesday — a British stock market deadline for a blueprint of the deal — to make a formal statement to say that the proposed is going ahead, being abandoned, or to request a delay.

British Defense Minister Philip Hammond had warned on Sunday that Britain could use its “golden share” to block the merger between EADS and BAE unless France and Germany agree to limit their stakes in the future company.

France holds a 15-percent share of EADS which would be diluted to nine percent in the new entity. Germany wants the right to buy a 9-percent stake in the new group to maintain parity with France.

Berlin, Paris and London each have a veto right on the merger negotiations and the tie-up has run into objections in all three countries.

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