EADS and BAE Systems call off merger plan to form aerospace giant

European Aeronautic, Defence & Space and BAE Systems abandoned their planned merger amid government resistance, leaving in tatters their aspiration to create the world's largest aerospace and defence company.

The two firms said they terminated the deal because the "interests of the parties' government stakeholders cannot be adequately reconciled with each other or with the objectives" of the merger. The deal crumbled just hours before a deadline expired to formalise the agreement.

Germany became the largest stumbling block on the path to an accord, and BAE chief executive Ian King told reporters there was more understanding with France and Britain.

BAE chairman Dick Olver said he would not revisit merger talks with EADS, the parent of planemaker Airbus, unless government positions changed significantly, and the firm would not look elsewhere for a new partner.

"It is, of course, a pity we didn't succeed but I'm glad we tried," EADS chief executive Tom Enders said.

The attempt to build an equal to Boeing exposed the divisions in Europe, with Germany keen to preserve a balance of power with France, and Britain wary to check political meddling at the hands of the French.