13 Sep 2012

Defence contractor and Airbus owner in merger talks

12:14 pm on 13 September 2012

British defence contractor BAE Systems and European aircraft group EADS are in merger talks.

BAE shares rose by 8% on Wednesday after reports the two companies are looking at ways to merge their businesses, while shares fell 5.6% in EADS.

EADS, a consortium of aerospace and defence manufacturers from France, Germany and Spain, owns the planemaker Airbus.

Under the potential deal, BAE would own 40% and EADS 60% of the new group and they would stay listed on their separate stock exchanges.

A BBC correspondent said a merger would create a giant aerospace company with deep pockets.

Under UK Takeover Panel rules, the two parties must announce a decision on the outcome of their talks by 5pm BST on 10 October.