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EADS says continuing BAE merger talks with govts

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

Tensions over the proposed supermerger spilled into the openon Friday, casting doubt on a rapidly approaching deadline asFrance, Britain and Germany jockeyed over the role of the statein the world's largest aerospace and arms group.

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

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

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

France wants to keep a stake but will not rule out addingmore, Germany wants to match France's role to avoid being leftaside by Europe's other main powers, and Britain wants to capstate involvement, several people familiar with the talks said.

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

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

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

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

A French parliamentary source said last week that Hollandewas ready to contact Merkel on the issue but there were noimmediate signs of any planned contact.

(Reporting by Gernot Heller; Writing by Christoph Steitz andSarah Marsh; Editing by Alison Williams)

((sarah.marsh@thomsonreuters.com)(+ 49 30 2888 5226))

Keywords: EADS BAE/TALKS