From BBC:  France and Germany must reduce their stakes in defence firm EADS if the UK is to allow a proposed merger with BAE Systems to go ahead, Defence Secretary Philip Hammond has said.

Mr Hammond told the BBC this was a "red line" issue for the UK.

He said the government was willing to use its golden share in BAE, which allows it to block any change in control of the UK-listed company. . . .

Speaking on BBC Radio 4’s The World This Weekend, Mr Hammond said: "We have made very clear that we do have red lines around the BAE-EADS merger and that if they can’t be satisfied, then we will use our special share to veto the deal.

"It is not, I think, 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."

Earlier, Chancellor George Osborne said the proposed $45bn (£28bn) merger must ensure British security and jobs are preserved.  (graphic: Financial Times)