11 Oct 2012

BAE, EADS call off merger

2:01 pm on 11 October 2012

Aerospace and defence firms BAE Systems and EADS have decided to cancel their planned merger.

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

Britain wanted its counterparts to agree to limit their influence in the merged firm in order to maintain BAE's strong working relations with the US Pentagon.

The BBC reports Germany was fundamentally opposed to the deal and once this became clear the companies had no option but to call off the deal.

BAE chief executive Ian King said he was disappointed the companies were unable to reach an acceptable agreement with the various government stakeholders.

In a letter to employees, EADS head Tom Enders said his firm never expected to face such opposition against the deal, in Berlin in particular.

UK firm BAE shares fell 2% in London trading as the news broke, and stocks in Franco-German Airbus-owner EADS jumped 3%.