Daimler controls a 22.5 percent voting stake in EADS, holding a 15 percent direct stake and controlling the votes of a further 7.5 percent belonging to a consortium of private and public sector investors.

A combined BAE and EADS would overtake U.S. aerospace company Boeing in sales.

MERGER POSES CHALLENGE FOR FINMECCANICA

Italy’s Finmeccanica faces growing concerns that it could be left on the sidelines as its main defense partners EADS and BAE Systems edge towards a giant European defense merger.

The state-controlled company, which has previously focused its plans for foreign growth on Britain and the United States, may have to expand co-operation with other European players left out of the $45 billion merger, such as France’s Thales .

Analysts, politicians and industry executives warned it can only do so from a position of strength and if it speeds up efforts to carry out a sensitive restructuring and asset sales.

“We should have moved sooner; now we need to catch up without wasting any more time,” Giuseppe Moles, secretary of the defense committee of the lower house of parliament, told Reuters.

Moles, a member of the center-right People of Freedom (PDL) party headed by former Prime Minister Silvio Berlusconi, urged the technocrat government of Mario Monti to intervene to prevent Finmeccanica from being left out of possible mergers among defense companies.