The merger never won over either company’s shareholders.

Barry Norris, founding partner at Argonaut Capital Partners, an EADS shareholder, said: “Today’s decision to terminate the merger talks is a triumph for common sense and shareholder value. Having sunk almost 30 billion euros ($38.70 billion) into new Airbus plane projects, which are only now beginning to break even, it made no sense for EADS to now share this with BAE shareholders.

“Continuing merger negotiations would have resulted in a long battle with shareholders and sustained tension over weak corporate governance. That the problems in executing the deal proved too complex should be a source of celebration rather than regret,” he said.

But without the deal, BAE remains exposed to severe cuts in U.S. defence spending as troops finish their withdrawal from Afghanistan. Among its many U.S. contracts, the British firm is the largest supplier of armoured vehicles for the U.S. military.

Chairman Dick Olver said the firm would return to business as normal, despite what he acknowledged was a tough climate.

“We have an excellent Plan A, which is driving the company, admittedly in a difficult business environment, and the executives are doing an excellent job,” he told reporters on a conference call alongside CEO King.