Defence Secretary Philip Hammond said a "number of things" stopped the merger deal between BAE Systems and EADS.
Mr Hammond added that despite the deal falling through, the British defence company still had a "great future".
You can see the interview with Mr Hammond on the ITV News website.
Defence Secretary Philip Hammond said the merger of defence giant BAE Systems and European rivals EADS collapsed because it was "too difficult" to reconcile the differences of the governments involved.
The chief executive of BAE Systems says he is "disappointed" the potential merger the company and EADS, who make Airbus aircraft has been cancelled.
– Ian King, chief executive BAE Systems
"We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders."
BAE Systems and EADS have terminated discussions over a potential merger, the two companies confirmed today.