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BAE shares down after UAE ends Typhoon talks

12/20/2013 | Reuters

LONDON Dec 20 (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
defence company that had pushed hard to land the $9.8 billion
deal.

British Prime Minister David Cameron had travelled 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 0925 GMT on Friday, the biggest fallers in the FTSE 100
index.
($1 = 0.6111 British pounds)

(Reporting by Paul Sandle; Editing by David Holmes)


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