Merger talks between EADS and BAE Systems have hit a new obstacle over Germany's reluctance to endorse an Anglo-French scheme for handling state shareholdings, several sources familiar with the matter said on Tuesday.
"Tonight, it is blocked," one source said, asking not to be named.
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The German government declined comment.
EADS was not immediately available for comment.
The two companies are now considered unlikely to issue a statement before Wednesday's market opening on whether they plan to seek an extension to a deadline which expires at 1600 GMT (12.00 p.m EDT) , the sources said.
A statement could be issued later in the day, two sources said.
Earlier, Britain and France had reported progress on efforts to resolve conflicts over state shareholdings and Britain said the companies would issue an early Wednesday statement.
(Reporting by Tim Hepher, Matthias Blamont, Michelle Martin, Andrea Shalal-Esa)