BAE says UAE pulls out of Typhoon talks

The UAE quit talks with BAE Systems to buy Eurofighters Typhoon aircraft. The company also did not yet reach an agreement with Saudi Arabia over a jet deal. (File photo: Reuters)

BAE Systems shares fell on Friday after the United Arab Emirates (UAE) quit talks to buy Eurofighter Typhoon aircraft, delivering a blow to the British defense company that had pushed hard to land the $9.8 billion deal.

British Prime Minister David Cameron had traveled to the UAE last month to add weight to month of lobbying for the Eurofighter contract, which BAE had said could be a “major game changer.”

Analysts at JP Morgan Cazenove said the termination of the talks was a major setback for BAE Systems, noting the contract could have been worth around 45 pence per BAE share.

In a statement issued late on Thursday, BAE also said it had still not reached agreement with Saudi Arabia over the pricing of Eurofighter jets in another deal.

The continued delay of the so-called Salaam deal has pushed BAE to repeatedly trim its full-year earnings forecasts, and JP Morgan Cazenove analysts said the failure to reach agreement was perplexing.

“In theory this should be easy to resolve,” they said, adding that the amount of money at issue in the disagreement, over whether the original price agreed included inflation, was only about 600 million pounds.

Shares in BAE Systems were trading down 4.8 percent at 420.8 pence at 9:25 GMT on Friday, the biggest fallers in the FTSE 100.

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Last Update: Wednesday, 20 May 2020 KSA 09:41 - GMT 06:41
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