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One day left for BAE to decide over merger

BAE makes the Eurofighter and employs thousands of staff in Lancahsire Credit: Peter Byrne/PA Wire

BAE Systems has just over a day left to decide whether or not to join forces with European defence company EADS.

The UK Takeover Panel deadline for the £28billion deal to be approved or abandoned is 5pm tomorrow.

So far the planned merger has sparked controversy on both sides of the channel.

The two firms may have to ask for an extension to give them more time to negotiate.

Part of the problem is that they're partly owned by Governments.

BAE and EADS face a number of hurdles if the deal is to go through, with France and Germany keen to keep significant equity stakes in the merged group.

And Prime Minister David Cameron is facing a major Conservative rebellion after 45 MPs signed a letter calling on the Prime Minister to veto the deal.

The German government may also block the move, it has been reported, after demanding that its stake is equal to France's and that the newly merged company's head office should be in Berlin. It is thought Germany is insisting on taking a 9% stake to match France's holding.

Britain holds a "golden share" in BAE, meaning it can veto deals that are seen to put the public interest at risk, but is not thought to have made any demands for a direct equity holding in the enlarged company.

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