EADS-BAE deal risks collapse due to governments: sources

Published October 01, 2012

| Reuters

Talks on creating a European aerospace and defense giant through a merger of Airbus parent EADS and Britain's BAE Systems are at risk of failing due to the divergent stances of the governments involved, three German sources said on Monday.

One of the sources, who is privy to the negotiations, said the chances of the German, French and British governments reaching agreement on the terms of the deal were now seen as smaller than the chances of it falling apart.

The sources said a successful deal hinged on three-way agreement on the role of the governments in a combined company, but said a tentative plan for the German and French states to each hold 9 percent of the new group was unlikely to be acceptable to the British.

"You could hardly sell this in Britain," a second source said, adding: "Then we won't get a deal."

(Reporting by Gernot Heller; Writing by Noah Barkin)

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