What now for EADS' Enders and BAE's King?

Oct 10, 2012, 6:52 PM EDT
A combo of pictures shows EADS chief Tom Enders (L) and Chief executive of BAE systems Ian King. A merger to create the biggest aerospace and defence group in the world from EADS and BAE Systems collapsed on October 10, 2012, with analysts saying Germany shot it down to avoid being sidelined.
AFP/Getty Images/LEON NEAL

The heads of Europe's two biggest aerospace firms will seek new strategies after Germany stymied what would have been the world's biggest arms and aviation company tie-up. EADS and BAE Systems dropped their proposed $45 billion merger after their government stakeholders, Britain, France and the U.K., failed to reconcile differences over state shareholdings and Germany expressed fundamental doubts about a deal that would have had widespread industrial and security implications for Europe. Britain's BAE Systems, which earns nearly half its revenue selling arms to the Pentagon, could end up a takeover target while Airbus maker EADS looks set to fall under even greater state sway with German industrial conglomerate Daimler confirming it still planned to sell part of its stake to the German government by year's end.