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BAE Systems Canada Inc. is paying the price for having no deal to sell. The U.C. defence group's largest shareholder, 13.3-per cent-owner Invesco Perpetual, has taken aim at the still-to-be-agreed merger with EADS NV. Keeping everyone onside when deals leak ahead of time is always tricky. And these days, angry investors can seem almost de rigueur for big mergers and acquisitions. Still, Invesco's intervention shortens the odds on a management clear-out at BAE if the merger fails.

British takeover rules mean the two sides, who have no formal agreement yet, cannot sell the combination to shareholders in too much detail (unless investors agree to be designated as insiders and forbidden from trading shares).

The information vacuum has been rapidly filled by politicians from Britain, France and Germany, followed by former executives, defence gurus, and a handful of small shareholders. Now enter Neil Woodford, Invesco's income-investing giant.

Taking a scatter-gun approach, Mr. Woodford lays into everything about the deal from the basic strategic logic, to its structure, merger ratio and even the two chief executives' growth focus, which he sees coming at the expense of returns. That recalls previous investor broadsides against Prudential and G4S PLC, among others. Some charges are weak, such as worries about the sustainability of dual listings; other concerns, such as potential damage to Pentagon relations, would surely be addressed before BAE could agree to any final deal.

Fundamentally, Mr. Woodford worries that this high-yielding portfolio stock will take the hatchet to its dividend, and that BAE is selling out too cheaply, given the contrast between low valuation multiples and the long, cash-generative contracts it enjoys.

Maybe BAE can forge ahead alone; over the next couple of years analysts generally reckon it can grind out a very small increase in revenue. Still, some former executives such as ex-CEO Mike Turner suggest things could actually get trickier as existing programs end, especially in the United Kingdom.

If BAE ends up without a deal, it won't be easy to return to the

status quo. The market will rightly be worried about the grim standalone diagnosis from the likes of Turner. But with management under attack for buying U.S. growth at high prices, a transaction-based answer looks harder. BAE's leaders, starting with chief executive Ian King, could soon need their own defence.