BAE Systems and EADS merger talks collapse

  • Talks over a $45 billion merger of EADS and BAE Systems collapsed on Wednesday after the governments of France, Germany and Britain failed to reach an agreement seeking to create the world's biggest aerospace and arms group.

    It followed days of talks between the British, French and German governments looking to overcome a political stalemate.

    The UK had requested its counterparts to agree to limit their influence in the merged firm in order to maintain BAE's strong working relations with the U.S. Pentagon.

    Media reports suggest that Germany was opposed to the deal.

    The failed outcome was announced ahead of a 5pm BST regulatory deadline to close the deal.

    "We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders," said BAE chief executive Ian King.

    In a letter to employees, EADS head Tom Enders said: "I'm ready to admit that we never expected to face such opposition against the deal, in particular not in Berlin. We will now take the time to clearly draw a number of lessons from this experience. We will need to review our group strategy and defence activities in particular."

    British firm BAE and Franco-German Airbus-owner EADS had to decide shortly after the end of the London trading day whether to ask the Takeover Panel for an extension to the merger talks.

    According to sources close to the negotiations, the two firms will not ask for an extension.