European Aeronautic, Defence and Space Co and BAE Systems are set to request more time to win government backing for their proposed merger, according to a person with direct knowledge of the talks.
The French and UK governments have reached an agreement that allows for an extension, the duration of which has not yet been decided, said the person, who asked not to be identified because the negotiations are private.
If the German government also enters the accord, it will be offered job guarantees, the person said. The deadline expires tomorrow afternoon.
The governments are the first major hurdle the companies need to clear in their bid to combine and create the world's largest aerospace and defence company by sales. Only once a more detailed merger agreement is approved can EADS and BAE take their plan to financial investors.
Some shareholders have questioned the transaction, saying political involvement may hurt business with the US, BAE's biggest customer.
EADS, based in Toulouse in southern France, and London- based BAE said September 12 that they are exploring a combination that would give EADS shareholders 60 per cent of the enlarged group and BAE investors the rest.
According to UK takeover rules, the companies have a month to hammer out a more formal merger agreement or seek an extension.
The extra time companies can request is flexible, ranging from a few days to a month.
Bloomberg