BAE Systems and EADS merger scrapped

A proposed €38 billion merger between EADS and BAE Systems was scrapped today because of the failure of governments to agree terms.  

The two companies said that they decided that it was “in the best interests of their companies and shareholders to terminate the discussions”.  

A merger between UK-based BAE Systems and the Franco-German-Spanish defence and civil aerospace group, EADS, which owns Airbus, would have created the world's biggest defence and aerospace group, and a European giant to rival the US company Boeing.  

In a statement, the two companies said that it had “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 move follows several days of talks between the governments of France, Germany and the UK. The UK, where BAE Systems is based, wanted France and Germany to reduce their stakes in the merged company.  

After the merger plan was made public on 12 September, the US government was also reported to be concerned about the extent of French and German government influence in the merged company.

Ian King, the chief executive of BAE Systems, said: “We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders.”

Tom Enders, his counterpart at EADS, said: “It is, of course, a pity we didn't succeed, but I'm glad we tried.”