BAE shares nosedive on merger talks

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Shares in UK defence contractor BAE Systems reversed a late rally last night to fall 9% this morning, after announcing it was in talks with European peer EADs about a merger.

In a statement last night just before the market closed, BAE said it was in discussions with European giant EADS about a merger which would create a company to rival US aerospace and defence giant Boeing. If approved the deal would see the two operate as one group by means of equalisation and other agreements, although both would remain separately listed on their existing exchanges. The merger would give BAE a 40% share while EADS would own 60% of the fresh entity, but the two companies would have a unified board and management structure. Shares in BAE rocketed by 8% on the news on...

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