France has also asked that the enlarged group’s corporate headquarters be based in Toulouse, its aerospace capital where Airbus is also based, and wants guarantees over the future of its defence industry, a person familiar with the proposals said.

Germany is not a direct shareholder but sees the transaction as a chance to tighten its grip on a balancing stake currently held by Daimler AG and a group of banks.

Both companies have appealed for minimum political interference in the group and want the corporate governance to be as simple as possible given sensitive national interests at stake in Britain, France and Germany as well as Spain.

Germany and France may try to secure a 27 percent combined shareholding in the new company, which would give them a blocking minority, the Financial Times Deutschland said on Friday.

STATE INVOLVEMENT

That move could prove a deal breaker since EADS boss Tom Enders has repeatedly said he wants to reduce state influence in a combined company and Britain and the United States remain opposed to state involvement.

“Both companies’ view is that the (EADS) voting blocks need to be dissolved so the new group can operate with a normal commercial governance structure,” said a source close to BAE.

Enders called good governance “the ‘go’ or ‘no go’ for this project” in a letter to employees last week.