Megadeal's Collapse Shakes Up Arms Industry

A deal to create a European defense and aerospace giant to rival Boeing and Lockheed Martin has collapsed and more weapons megadeals now look unlikely, Reuters finds. The proposed $45 billion merger between Britain's BAE Systems and Airbus maker EADS fell through after political leaders in Britain, France, and Germany failed to reach agreement. The stiffest opposition to the deal came from Germany, the BBC reports.

With the merger off—and defense spending cuts looming in the US and Europe—major defense companies are now expected to focus on buying up smaller firms. "The American companies are all at a place where they're not eager to grow in defense and are basically trying to secure their base, while the overseas companies have been chastened in watching the BAE-EADS transaction falter," a Washington-based defense consultant says. (More BAE stories.)