Merger talks between BAE Systems and EADS have been abandoned because the interests of the three governments involved in the deal could not be reconciled, the two companies have announced.
“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. 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,” the two sides said in a statement.
The two companies blamed the governments for the talks being abandoned.
“Discussions with the relevant governments had not reached a point where both companies could fully disclose the benefits and detailed business case for this merger. BAE Systems and EADS are, however, confident that these would have provided a strong case to take to their shareholders,” the companies said.
The two companies said that from the outset of discussions, they were clear that they would proceed with a merger of their businesses “only if a transaction structure could be created that aligned the interests of the parties’ stakeholders and received their support. BAE Systems and EADS worked constructively to deliver such a structure.”
Citing an unnamed source, Agence France-Presse reported Oct. 10 that German opposition was behind the breakdown.
“It did not work because the Germans blocked it,” the source told AFP.
Europe’s leading aerospace and defense companies were in talks leaked Sept 12. The merger would have created the world’s largest aerospace and defense company, dwarfing even Boeing.
Oct. 10 was the deadline imposed by Britain’s takeover code for the companies to announce whether they would go ahead with the deal or not. They could have also asked for more time to negotiate the merger.