Defence giant BAE Systems has officially announced the merger between it and aerospace firm EADS is off.

The finger of blame for the failed £28bn deal is now being pointed at Germany, despite neither EADS or BAE seeming to know why the country opposed the merger.

"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.

It went on to say it had "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".

After the announcement, BAE's Chief Executive Ian King was asked whether the German government had proved more of an obstacle than the French.

"That would be an accurate representation," he replied.

A spokesman for EADS told Reuters news agency that "no firm reason has been given for the German opposition".

There were reports that German Chancellor Angela Merkel was against the deal and that her government had demanded the joint firm be headquartered in Munich.

But Germany was not alone in its scepticism over the terms of the merger.

UK Defence Secretary Philip Hammond had said France and Germany must reduce their stakes in EADS if the UK was to allow the merger to go ahead.

Invesco, the largest shareholder in BAE, had also voiced "significant reservations" over the tie up and the impact it could have on shareholders.

In today's announcement both companies continued to fight their corner, saying the deal had made sense.

King said the firm was "obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders".

"We believe the merger presented a unique opportunity for BAE Systems and EADS to combine two world class and complementary businesses to create a world leading aerospace, defence and security group," he said.

Tom Enders, Chief Executive of EADS, said he was "glad" they had attempted the deal, adding "I'm sure there will be other challenges we'll tackle together in the future".

The two firms had until 5pm (4pm GMT) on Wednesday to announce the terms of the merger or ask for more time to finalise their plans, under rules set down by the UK's City Takeover Panel.

"While BAE's long-term prospects could still be quite excellent, the failed merger will leave the firm much more exposed to uncertain factors beyond its control," said David Reeths, Director of Consulting at defence analyst IHS Jane's.

These stumbling blocks included major declines in the U.S. defence budget and potential losses in an increasingly competitive international defence market, he said.

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