LONDON â€" The aerospace giants EADS and BAE Systems ended mergers talks on Wednesday after political haggling between European governments scuppered the deal.
The announcement comes only hours before a deadline set by the British authorities to decide whether to proceed with a deal.
In a brief statement, the European companies said they had been able to reach agreement on the commercial terms for the merger, but had not been able to win government support for the deal. Under the current shareholder structure, France, Germany and Spain hold sizeable stakes in EADS, which manufacturers the Airbus passenger airline.
During weeks of negotiations, it had become clear that the European governments could not agree to their respective new holdings in the combined company, according to person with direct knowledge of the matter who spoke on the condition of anonymity because he was not authorized to speak publicly.
In particular, Germany had called for guar antees over long-term employment for EADS employees based in the country. Concerns had also been raised over the ability for BAE Systems, which has large defense contracts with the United States government, to continue operating in the country if European governments continued to own a large stake in the combined company.
“It has become clear that the interests of the parties' government stakeholders cannot be adequately reconciled with each other or with the objectives that BAE Systems and EADS established for the merger,†the companies said in a joint statement on Wednesday.
