Shares of EADS dropped 10.2 percent, while BAE Systems shares fell 7.3 percent Thursday. Both companies are listed on stock exchanges in Europe with EADS listed in Paris and BAE listed in London, The New York Times reported.
The two companies announced Wednesday they were discussing a merger that would create a company with annual revenue of more than $90 billion.
The combined company would have 220,000 people on the payroll worldwide, although the companies did not say how many job redundancies a merger would create.
Lagardere, a French conglomerate that owns 7.5 percent of EADS said it "intends to ensure that all consequences associated with the proposed EADS-BAE Systems merger are taken into consideration in determining the terms and conditions of the proposed transaction before it consents to the deal."
Having announced a deal is in discussion, the clock is ticking. British law forbids firms from dragging out merger talks, in part to keep one company from pestering another.
In this case, EADS and BAE Systems have until Oct. 10 to either announce a merger proposal or to close down the discussions.