BAE - EADs mega merger on the rocks

Fears are mounting that the planned multi-nation merger between BAE Systems and EADS is in jeopardy due to differing demands of governments involved.

According to Germany's Der Spiegel magazine, which cited government sources, the £38-billion deal was heading for collapse as French and British politicians remained in  disagreement.

The magazine said that Britain, home to BAE Systems, was averse to any one country owning more than 10 per cent of the merged defence and aerospace company.

It added that France insisted it should hold more than 10 per cent even as it retained the option to increase its shareholding later on.

Germany, France and Britain would need to agree on their respective holdings in the combined entity if the deal were to go ahead.

An EADs spokesman denying the report said the company had  been informed by the governments about the status of the discussions but in no way had they been told that the deal was off.He added, the company continued to work towards the 10 October deadline that it had been given by the UK government.