Its $45 billion merger plan shot down, BAE Systems must now hunt growth elsewhere if the British arms maker is to find the cash needed to sustain big dividends and avert the possibility of a break-up.

CEO Ian King is under pressure to spur the search for new business with a lucrative deal in Saudi Arabia now seen as crucial to bolster the balance sheet.

The warning signs for the maker of Astute nuclear submarines and Challenger tanks are clear.

Net debt at Europe’s biggest arms maker is mounting, and there are ominous signs from the massive U.S. defence market that has powered recent revenues.

The fact it considered a merger with Airbus parent EADS , a company in which it sold a stake in 2006 having balked at a full merger several years earlier, showed how wide-ranging BAE’s search for a new strategy has become.

“The genie is out of the bottle now and they cannot put it back,” one of the top 30 shareholders in BAE told Reuters.

Armoured vehicles used in wars in Afghanistan and Iraq as well as warships and fighter jets for Europe have fuelled BAE’s growth and profits. It has extended its reach with deals in Saudi Arabia and Australia.

But Europe’s arms purchases are drying up and U.S. and British troops in Afghanistan are heading home, meaning the outlook for BAE, formed in 1999 with the merger of Marconi Electric Systems and British Aerospace, is dimming.

“BAE shareholders, they need to ask management where they go from here because clearly in agreeing to do this merger there was an implicit admission that maybe their focus on defence was perhaps a failed strategy,” Societe Generale analyst Zafar Khan told Reuters.