BAE shares up on news of possible merger with EADS

Published:  13 Sep at 12 PM

Shares in BAE systems, the UK defence contractor, have risen by around eight per cent on the news that it may be considering a merger with EADS, the European aerospace company. In a statement issued by BAE it was explained that the firms would operate as a single entity, but would remain separately listed on their respective stock exchanges.

If the tie-up goes ahead, then EADS would own a 60 per cent share of the group and BAE would control 40 per cent. Both firms claim that a merger would offer significant benefits for shareholders and customers.

A spokesperson for the government said that due to the sensitive nature of the companies’ activities there would have to be assurances that a merger would be in the public interest of UK citizens.

EADS is the owner of plane manufacturer Airbus and is a consortium of defence and aerospace companies in Spain, Germany and France. BAE and EADS are currently in discussions concerning the deal and have been given until 10 October to announce a decision. BAE said it would be asking for the deadline to be pushed back in the event that talks with EADS are ongoing.

The Unite union said the announcement of a possible merger had been a surprise for much of the BAE workforce. It added that the main priority would be to make sure that jobs are protected in what would become the largest UK manufacturing company.