European Aeronautic, Defence & Space Co. and BAE Systems Plc abandoned their planned merger amid government resistance, leaving in tatters their aspiration to create the world's largest aerospace and defense company.

"Discussions with the relevant governments had not reached a point where both companies could fully disclose the benefits and detailed business case for this merger," BAE said in a statement today, as a deadline neared with no accord in sight.

The attempt to build an equal to Boeing Co. exposed the divisions in Europe, with Germany keen to preserve a balance of power with France and the U.K. wary to check political meddling at the hands of the French. The breakdown blocks BAE's path to a civil aviation business in times of shrinking defense budgets, and marks the second failure in a decade for EADS to combine aerospace assets from Europe's three largest economies.