EADS says continuing BAE merger talks with govts

BERLIN Sat Oct 6, 2012 10:26am EDT

BERLIN Oct 6 (Reuters) - EADS is continuing "constructive talks" with governments over its proposed $45 billion merger deal with BAE Systems and remains convinced that it is an excellent deal for Europe, a spokesman said on Saturday.

Tensions over the proposed supermerger spilled into the open on Friday, casting doubt on a rapidly approaching deadline as France, Britain and Germany jockeyed over the role of the state in the world's largest aerospace and arms group.

But EADS has been at pains to stress the merger proposal had not collapsed.

"We are continuing our constructive talks with the governments," the EADS spokesman said. "We remain convinced that we have made an excellent offer for Europe."

While both firms want a minimum government presence, mainly to protect BAE's defence interests in the United States, the deal has sparked a three-way political logjam.

France wants to keep a stake but will not rule out adding more, Germany wants to match France's role to avoid being left aside by Europe's other main powers, and Britain wants to cap state involvement, several people familiar with the talks said.

Time is running out before a UK stock market deadline of Oct. 10 for a blueprint of the deal, which affects national security interests on both sides of the Atlantic.

A French government source has said the deadline could be extended by 28 days, something the companies are so far reluctant to do in the absence of concrete progress.

Senior aides to the leaders of all three countries held a video conference on Friday and "put everything on the table to see if we can go forward", the source added.

EADS and BAE denied a German report that this had resulted in deadlock and that the merger proposal had collapsed.

A French parliamentary source said last week that Hollande was ready to contact Merkel on the issue but there were no immediate signs of any planned contact.

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