BAE and EADS merger deal 'on a knife edge'

Laura Kuenssberg

Former Business Editor

BAE and EADS merger are trying to strike an "astonishingly delicate balance" of different demands. Credit: Peter Byrne/PA Wire

So is it on, or is it off? Sources on different sides of the deal and the British government tell me genuinely, it is not yet decided.

Even the Defence Secretary, who has been involved in the negotiations does not yet know what is happening yet, and is waiting to be told. Talks are still going on to see if the two enormous defence companies, BAE and EADS, have a hope of satisfying the demands of politicians and shareholders to make their mega merger work.

The boards have been meeting, the bosses of the two companies have been in close contact and at this moment I'm told the deal is still possibly on. The companies are trying to strike an "astonishingly delicate balance" of different demands, which may just prove too difficult.

But while negotiations are on a "knife edge" they have not yet failed. A source close to the deal says the companies "still believe there is a very strong and sound business case" and are hoping to get through the "almighty toxic mix" of obstacles.

The clock is ticking and with the pressure of time, things could change very quickly. By this afternoon the companies do not have to say 'now or never', but they do have to either ask officially to extend their talks or drop the plans altogether.

Whenever the announcement does come, it will have a huge impact on one of our biggest companies and its long term future.