AlQa'dah 19, 1433, Oct 5, 2012, SPA -- Talks over a European supermerger between EADS and BAE Systems reached a political crunch point on Friday as Britain, France and Germany attempted to narrow differences on a $45 billion proposal to create the world's largest aerospace and arms group, Reuters reported. Europe's two largest aerospace groups headed into the weekend with the fate of their planned merger hinging on a high-level accord over state shareholdings in the group. Time is running out before a UK deadline of Oct. 10 for a deal. EADS and BAE denied a report by Germany's Der Spiegel magazine that the talks had collapsed. "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," a spokesman for Airbus parent EADS said. "We continue to work towards the Oct. 10 deadline that we have been given by the UK government," he added. Der Spiegel reported in its online edition that Britain, France and Germany, whose approval is necessary for the record aerospace merger to go ahead, had failed to agree. A French government source described the report as "unfounded". German officials declined to comment. A number of potential 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. Germany is holding out for the same role as France, which would hold 9 percent in the new group, and wants to host the headquarters. This has put it at odds with EADS, which wants minimum political interference. A new stumbling block emerged overnight as Reuters reported that negotiators were seeking ways to avoid a revival of state interference should governments buy shares in the future. France has a 15 percent stake in EADS and under current arrangements could buy out industrial partner Lagardere, the French media firm which wants to sell its 7.5 percent stake. Britain in particular wants France to forego that right in order to make the deal more presentable to authorities in the United States, where BAE earns nearly half of its revenue. "Everyone is trying to inch forward to a position of comfort on this (point), but you can expect a few convulsions along the way," said a person involved in the negotiations. "You don't want a situation where governments feel that if more shares become available, they can go ahead and buy them." The Spiegel report said France's refusal to back down on this point had brought the talks to a point of collapse. A French-based source called the reported comments a negotiating tactic. -- SPA
