BAE/EADS Mega Merger 'On Brink Of Collapse'

Fears are growing that the planned multi-nation merger between BAE Systems and EADS is at risk because of differing demands of governments involved.

Germany's Spiegel magazine, citing government sources, claimed that the £38bn deal was on the brink of collapse because of a disagreement between the French and British politicians.

It reported that Britain, home to BAE Systems, wanted to prevent at all costs any one country owning more than 10% of the merged defence and aerospace company.

It added that France insisted it should hold more than 10% - while retaining the option to increase its shareholding later on.

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

EADS denied the report was true. A spokesman said: "We have been informed by the governments about the status of the discussions but in no way have we been told that the deal is off.

"We continue to work towards the October 10 deadline that we have been given by the UK Government."

BAE Systems similar denied the headed for disaster.

A spokesman said: "If the deal was off BAE Systems would be issuing a statement.

"In the meantime we continue to work towards to the October 10 panel imposed deadline."

According to the Financial Times, more than 40 Tory MPs have signed a letter to the Prime Minister demanding "safeguards" over the French and German shareholdings.

Meanwhile, the French President's office declined to comment on the reports about the merger collapse claim.