Chiefs face quit calls over failed merger bid
Embattled defence giant BAE Systems is facing calls from major shareholders for top bosses to step down following its failed attempt to merge with EADS.
A group of investors - including BAE's largest shareholder Invesco Perpetual - has written to the board demanding the resignation of chairman Dick Olver and senior independent director Sir Peter Mason, as well as an overhaul of strategy at the group.
The letter has not been made public, but it is understood the shareholders - together holding around 18% of shares in BAE - claim the abandoned £28bn merger with EADS has caused "significant damage" to the company.
ShareSoc, a group that represents private investors, also stepped up pressure on BAE's board by calling for the resignation of Mr Olver and chief executive Ian King, saying the deal was "misconceived from the beginning".
BAE and EADS were forced to scrap the tie-up earlier this month after political wrangling scuppered their plans.
The merger would have created the world's biggest defence and aerospace group, with combined sales of around £60bn.
Mr Olver and Mr King have insisted the group can still "prosper in the future" despite the deal's collapse.
In a recent open letter, they said they did not "regret" the failed bid, which would have improved BAE's exposure to commercial markets through EADS's Airbus business in a climate when public defence spending is declining.
But Invesco and two other major shareholders wrote to BAE's board hitting out at a "misguided" strategy and saying they want a change at the top.
They are pressing for a review of the group and believe BAE should refocus on its core defence business.
Invesco, which owns more than 13% of the group, had publicly announced its opposition to the deal, saying it did not understand the strategic logic of the merger and was worried it would threaten BAE's "unique and privileged position" in the US defence market.
ShareSoc said investors were right to demand action.
The group said: "This merger was misconceived, mishandled and simply a mistake.
"The directors of BAE who promoted it should accept responsibility and resign. BAE clearly needs a new leadership team that can develop an alternative solution to the strategic challenges the company faces."
BAE said it remained "fully supportive of its directors".
"We listen carefully to the views of all our shareholders," it added.
The decision to ditch the merger plan has led to fears over BAE job security, while others believe the FTSE 100 group is now more vulnerable to a takeover bid.
Shares have dropped 8% in the last week and were down another 2% yesterday.