EADS and BAE Systems are considering sweetening their proposed merger deal for EADS shareholders, after resistance from France and Germany, sources familiar with the transaction said.
EADS and BAE are discussing valuing EADS at more than the 60 percent of the combined company that has so far been suggested, the sources said.
"The ratio could be changed up to 3 percentage points in favour of EADS," an EADS advisor said, while another source said a change of up to 3-5 percentage points in favour of EADS was possible. This would push the ratio to 63:37 or 65:35.
However, BAE is unwilling to see any changes and one source close to BAE said the two companies were not discussing a change to the ratio.
EADS was not available for comment. BAE Systems declined to comment.
The tie-up would create the world's largest integrated defence and aerospace company with annual sales of USD$93 billion, but is fraught with national economic and security concerns.
Some investors have previously said the proposed ratio is weighted too heavily in favour of BAE, which is heavily exposed to shrinking national defence budgets.
The German government on Monday set out a list of reservations about the deal in a government paper, saying a 70:30 ratio would be a more accurate valuation.
France, which unlike Germany holds a direct stake in EADS, is concerned that any deal would dilute its influence with the group, while Germany wants to keep jobs in the country.
Daimler, which was in talks to sell a 7.5 percent stake in Airbus parent EADS to Germany's state bank KfW, is also unhappy with the valuation of the deal.
Changing the ratio would enable the carmaker to exit its investment without booking losses and therefore increase Daimler's willingness to participate in the deal.
To assuage French and German concerns about safeguarding technology and jobs, EADS and BAE are also considering guaranteed board seats for the governments of France, Germany and Britain, the sources said.
France and Germany also want to make sure that the merged group does not hinder the prospects for rivals such as France's Dassault and Thales, or Germany's OHB, they added.
German Chancellor Angela Merkel met French President Francois Hollande to discuss the plans at the weekend, but no joint decisions were made.