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Share prices drop at BAE
12:40pm Friday 14th September 2012 in Business
DEFENCE manufacturer BAE Systems has seen its share price drop in the face of potential hurdles it could face if it proceeds with a multi-billion-pound merger.
BAE is in talks with Airbus aircraft manufacturer European Aeronautic, Defence and Space (EADS) to create the world’s biggest aerospace company with a market value of about £31bn.
BAE’s statement initially sparked an 11 per cent jump in its share price, but it has now pulled back to stand six per cent lower, as analysts raised concerns about the complexity of a potential deal. As well as the sensitive nature of national security work handled by the two firms, the success of the deal also hinges on various government approvals. The UK Government, which has a so-called golden share in BAE that allows it to veto deals that are seen to put the public interest at risk, has already said it will seek to ensure UK interests are properly protected. Andrew Gollan, analyst at brokers Investec, advised BAE investors to sell their shares in the wake of the announcement. BAE said a tie-up with EADS would form a world-class company in its sector, with combined sales of £60bn and 220,000 staff, employing 48,000 in the UK alone.
TALKS HOPE: Ailing retailer JJB Sports has confirmed it was holding talks after receiving offers from several potential suitors as it seeks to secure the firm’s future.
But the group, which employs 4,000 staff, reiterated its warning that shareholders – who include the Bill and Melinda Gates Foundation – were likely to see their stakes wiped out under any rescue deal. The 180-strong chain put itself up for sale at the end of last month after failing to secure the funds needed to overhaul its stores. News of interest from various bidders raises hopes that it may be able to strike a deal and stave off administration. There had been fears that a sale process might fail after reports earlier this week suggested one of the frontrunners to buy the struggling retailer had not submitted a bid, sending shares slumping further and leaving JJB valued at less than £1m.
DIRECTOR LEAVES: Construction firm Morgan Sindall has confirmed that Gordon Ray, its North-East managing director, has left the business as part of a company restructure. The firm plans to operate across four geographic regions rather than six, with Dave Smith now responsible for the North of England and Wales. As part of the what the firm called operational efficiencies, Peter Whitmore, its boss in the South-West, has also left.