A deal to create the world's biggest aerospace company, three months in the making, died in a three-minute phone call.

On Tuesday night, after days of intense negotiations among European government officials and executives over the proposed merger of Airbus parent European Aeronautic Defence & Space Co and British defence giant BAE Systems, German Chancellor Angela Merkel called French President François Hollande. Merkel told Hollande that Germany believed the deal's negatives outweighed its benefits for her country, and that she couldn't support it, according to several people familiar with the conversation.