With just a couple of hours left to reach a deal or ask for an extension, the proposed merger between defense contractor BAE Systems plc and European Aeronautic Defense and Space Co. (EADS), the parent of aircraft maker Airbus, could be dead. The two companies can only ask for an extension to negotiations if there is substantial progress in the talks. And that is what's missing.
Reuters reports that there has been no movement in the talks since last night and that further negotiations to break the deadlock can only come if requested by German Chancellor Angela Merkel, French President Francois Hollande and British Prime Minister David Cameron.
Britain and France appear willing to extend negotiations, but Germany, which has opposed the merger all along, continues to oppose the merger. According to Reuters:
If there is a breakthrough, BAE will probably ask for the maximum extension of 28 days for the talks, in order to clear a logjam between the three governments which are divided over state shareholdings in the merged company.
Absent intervention from the three government leaders, the two companies are unlikely to ask for an extension, effectively killing the deal as it now stands. The merger would have created a company with a market cap of around $50 billion that would have been 60%-owned by EADS and 40%-owned by BAE.