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BAE shares fall as investors digest failure to win £6bn UAE contract BAE shares fall as investors digest failure to win £6bn UAE contract
(35 minutes later)
BAE shares dropped on Friday as investors reacted to its failure to win a £6bn contract to sell fighter jets to the United Arab Emirates.BAE shares dropped on Friday as investors reacted to its failure to win a £6bn contract to sell fighter jets to the United Arab Emirates.
The UK arms manufacturer revealed after the market closed on Thursday that more than a year of talks to supply 60 Typhoon aircraft to the UAE had failed.The UK arms manufacturer revealed after the market closed on Thursday that more than a year of talks to supply 60 Typhoon aircraft to the UAE had failed.
BAE also said vital negotiations with the Saudi government over the pricing of an existing Typhoon contract, watched closely by shareholders, would drag into next year.BAE also said vital negotiations with the Saudi government over the pricing of an existing Typhoon contract, watched closely by shareholders, would drag into next year.
BAE shares fell as low as 422p in response to the news and were down 3.9% at 424p in early morning trading.BAE shares fell as low as 422p in response to the news and were down 3.9% at 424p in early morning trading.
The news is a serious setback for BAE as it seeks to reduce its reliance on US and British defence markets hit by government spending cuts. BAE's search for new sources of revenue has seen it pursue a failed merger with the Airbus owner EADS and launch a major push into emerging defence markets such as the UAE and India.The news is a serious setback for BAE as it seeks to reduce its reliance on US and British defence markets hit by government spending cuts. BAE's search for new sources of revenue has seen it pursue a failed merger with the Airbus owner EADS and launch a major push into emerging defence markets such as the UAE and India.
The company said on Thursday it had not built the prospect of a successful outcome in the UAE into its financial plans.The company said on Thursday it had not built the prospect of a successful outcome in the UAE into its financial plans.
The news was a blow not only to BAE but also to the prime minister, who intervened last month to try to secure a deal that would have been a significant boost for British exports. During a visit to the UAE, David Cameron urged Sheikh Mohammed bin Zayed Al Nahyan, the crown prince of Abu Dhabi, to opt for the Typhoon over a rival fighter produced by France's Dassault Systemes. The news was a blow not only to BAE but also to the prime minister, who intervened last month to try to secure a deal that would have been a significant boost for British exports. During a visit to the UAE, David Cameron urged Sheikh Mohammed bin Zayed Al Nahyan, the crown prince of Abu Dhabi, to opt for the Typhoon over a rival fighter produced by France's Dassault Systèmes.
BAE also said it was still in talks with the Saudi government about the terms of its contract to supply 72 Typhoons to the country. A deal was signed in 2007 but it included provisions for re-negotiation as economic conditions changed. BAE also said it was still in talks with the Saudi government about the terms of its contract to supply 72 Typhoons to the country. A deal was signed in 2007 but it included provisions for renegotiation as economic conditions changed.
The Saudi negotiations are being followed keenly by investors. BAE is buying back £1bn of its shares to boost investor returns but has said completing the buyback depends on resolving the Saudi talks.The Saudi negotiations are being followed keenly by investors. BAE is buying back £1bn of its shares to boost investor returns but has said completing the buyback depends on resolving the Saudi talks.
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