BAE, EADS merger goes kaput

Merger talks between BAE Systems and EADS have collapsed, as the companies announced that they have ended negotiations.

In their joint announcement, the companies said that they still believed the merger was based on “sound industrial logic.”

The deal apparently died because the two companies could not satisfy their government stakeholders in France, the United Kingdom, Germany and the United States that the structure of the new company was in everyone’s best interest.

“We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders,” BAE CEO Ian King said in a statement. “We believe the merger presented a unique opportunity for BAE Systems and EADS to combine two world class and complementary businesses to create a world leading aerospace, defence and security group.”

The Wall Street Journal is reporting that the deal fell apart because the U.K., France and Germany could not agree on state ownership of the new company, board membership and where the company would be based.

One of EADS shareholders is the French government. Other parts of the company are owned by French and German corporations. It also has dual headquarters in France and Germany.

In the United States, there were concerns that regulators could have forced a sale of BAE’s intelligence business as a condition for approving the merger.

There also has been speculation that if the merger collapsed, that BAE would be broken into pieces and sold. King, however, described BAE as “strong and financially robust.”

“We continue to see opportunities across our platforms and services offerings and in the various international markets in which we operate,” he said.