Make-or-break deadline looms for EADS-BAE Systems merger

Time seemed to be running out yesterday for the complex and politically awkward merger of EADS and BAE Systems to come to fruition.

The aerospace giants headed into the weekend with the fate of their merger hinging on a high-level accord over state shareholdings in the group. A UK deadline of 10 October for a deal to be agreed has been set.German newspaper Der Spiegel reported that Britain, France and Germany, whose approval is necessary for the record aerospace merger to go ahead, had failed to agree.

A spokesman for EADS denied the report: "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 10 October deadline that we have been given by the UK Government," he added.

A French government source described the report as "unfounded", while German officials declined to comment.

A number of stumbling blocks have emerged since the proposed tie-up was announced last month.

These include conflicting political interests in Britain, France and Germany, as well as some shareholders' dissatisfaction with the terms. BAE is keen to ensure there will be little state interference in running the new company. It wants France to forgo rights to increase its 15 per cent stake.