Britain's BAE Systems and Europe's EADS have told the Pentagon they will create a ring-fenced US defence firm with a board of US nationals to win approval for their proposed 28 billion pound ($45 billion) merger, the Sunday Times newspaper said.
The American arm will have just one British director - BAE's chief executive Ian King - while no French or German executives will be given seats, or be able to see details of US contracts, the paper said, without citing sources.
Earlier this month British defence company BAE and European aerospace giant EADS announced that they were in early talks to create a global giant to compete with the likes of Boeing and Lockheed Martin, but the two companies face growing political obstacles to the deal.
France, which has a 15 percent stake in EADS, and Germany, which has no direct stake, pledged on Saturday to consult closely on the deal but announced no joint decisions.
The offer to create a ring-fenced US company is aimed at preserving BAE's privileged relationship with the Pentagon, which is governed by a unique contract, the special security agreement (SSA), the Sunday Times said.