Stalemate in EADS and BAE Merger Threatens Deal

The European arms manufacturers have until 1600 GMT on Wednesday

Scott Krane ,

Gulfstream G250 business jet in test flight
Gulfstream G250 business jet in test flight
Israel news photo: IAI / Gulfstream

The Franco-German firm EADS and the English BAE Systems are preparing to make one final effort to resuscitate the turbulence-plagued $45 billion aerospace merger as doubts grow over German investments.

EADS and BAE systems have until 1600 GMT on Wednesday to decide and declare whether they wish to jettison the deal or petition UK regulators for more time or finalize their plans to create what would be the largest aerospace and weapons manufacturing firm the world over.

Sources affiliated with the negotiations say that German Chancellor Angela Merkel had opposed the proposal to combine Airbus passenger airplanes with the British defense contractor BAE, according to Reuters.

As a result of the stalemate, giving some kind of a statement before Europe's stock markets open, reporting on the progress of the deal, seems highly unlikely.

“France and Germany want to keep a strong say in the combined company while Britain wants to protect BAE from state ownership which could affect its contracts in the United States.” reads a report in Reuters. Germany and Britain could accept lower state shareholdings than is the case at EADS which is more than half controlled by France, Germany and Spain. But France rejects that.” The report continues, “France and Britain, meanwhile, could accept unequal stakes between France and Germany but Berlin demands parity.” it says, “Sources involved in the deal said Germany also wanted to ensure there was a major headquarters in Munich to counter corporate centers in Toulouse, France and Farnborough, Britain.”