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Merger of aircraft firms stalls

October 10, 2012

European Airbus owner EADS and British aircraft manufacturer BAE Systems have called off a planned merger that would have led to the formation of the world’s biggest defense and aerospace group.

An Airbus A330 MRTT tanker refueling one F-16 fighter
Image: picture-alliance/dpa

Talks on the proposed $45-billion (35-billion-euro) deal collapsed on Wednesday after the governments of Britain, France and Germany were unable to agree terms.

BAE said in a statement that it had not been possible to reach an accord on several issues, including the proportion of shares that the French and German firm should own and where the new organization's headquarters should be based.

"BAE Systems and EADS have therefore decided it is in the best interests of their companies and shareholders to terminate the discussions and to continue to focus on delivering their respective strategies," it said.

EADS and BAE Systems End Merger Talks

EADS chief executive Tom Enders expressed disappointment on behalf of the Franco-German-led group. "It is, of course, a pity we didn't succeed but I'm glad we tried," Enders said in a joint statement by the firms.

German Defence Minister Thomas de Maiziere rejected suggestions that the merger had failed because of opposition in Berlin, with the German government fearing a loss of control. "I have noted this opinion. I don't share it," said de Maiziere.

EADS is the maker of the widely-used Airbus passenger jet, while BAE Systems - formerly British Aerospace - already partners EADS within the Eurofighter consortium.

The deal had been fraught with problems from the very beginning, requiring political as well and commercial conditions to be satisfied.

BAE, the main supplier to the UK's defense ministry, sold its own 20 percent stake in Airbus for $2.7 billion to fund its move into the US defense industry. There had been fears that the proposed deal might also compromise BAE's commercial interests in the US.

While Germany has no direct stake in EADS, it is represented by German manufacturer Daimler AG, which holds just above 22 percent. France has an identical stake, divided between the state and the publisher Lagardere.

rc/msh (dpa, Reuters)