14 Sep 2012

BAE and EADS shares fall as merger talks revealed

1:19 pm on 14 September 2012

Shares in Britain's BAE Systems and Europe's EADS fell sharply after the firms announced they were in merger talks.

With governments holding stakes in the two companies, politicians were weighing the merits of the move, the BBC reports.

Germany and France hold stakes in EADS, and the UK has a special golden share - a holding that blocks unwanted takeovers - in BAE.

The three governments would receive special shares in the new company also designed to stop hostile takeovers.

Should the two companies combine they would be the world's biggest defence and aerospace company - bigger than the US giant Boeing.

The group would produce Airbus, commercial planes, submarines and combat jets.