He also said BAE Systems was not prepared to do anything that would have compromised the prospects of its important U.S. business, indicating that concerns over government influence played a key role in the decision.

EADS and BAE Systems will not resume talks until the political landscape surrounding a possible deal has changed materially, King adds.

Both companies said it was not business logic that thwarted the transaction. Instead, “notwithstanding a great deal of constructive and professional engagement with the respective governments over recent weeks, it has become clear that the interests of the parties’ government stakeholders cannot be adequately reconciled with each other or with the objectives that BAE Systems and EADS established for the merger,” the companies said.

Peter Hintze, the German aerospace coordinator, indirectly confirmed the reservations of the German government. “I believe that in this formation [EADS and BAE Systems remaining separate], Germany’s industrial policy interests to sustain a strong aerospace value chain from research to development and industrial production is served the best,” he says. Defense Minister Thomas de Maiziere noted EADS’ comments that Germany was responsible for the merger’s collapse, and added, “I don’t agree.”

U.K. Defense Minister Philip Hammond says it was “too difficult” when all the different interests had to be taken into account.

French President Francois Hollande says governments should not be considered responsible for the breakdown of talks. “That is a decision made by the companies.”

France and the U.K. appeared to be close to an agreement. Sources say France would have been prepared to limit its ownership in the company, a key prerequisite for the U.K. to approve the deal.