EADS, BAE discuss merger

European Aeronautic, Defense and Space, the parent of Airbus SAS, is in negotiations with BAE Systems about a merger.

The talks are at an advanced stage and the companies are exploring a transaction allowing London-based BAE to maintain its independence to sell into the US defence market, said one source, who asked not to be identified because the talks are private. A final deal has not been reached, and an accord may still fall through, the people said.

A combination of BAE and EADS would echo plans for a single European aerospace business abandoned more than a decade ago when the formation of the two companies split the industry along civil and defence lines. A merger would create a counterweight to US aerospace companies including Boeing, Airbus’s main rival in civil aviation.

EADS chief executive Tom Enders said yesterday he had no comment. BAE spokesmen declined to comment.

Shares in BAE surged as much as 38.8p, or 12%, to 367.5p in London, while EADS fell as much as 2.9% in Paris, valuing the company at about €23.9bn.

The two companies today co-operate on the Euro-fighter jet, and BAE used to own a stake in Airbus.

— Bloomberg