British defence manufacturer BEA Systems has lost a multi-billion pound deal to sell 60 Eurofighter Typhoon supersonic jets to the United Arab Emirates.
Following the announcement, the value of BAE System’s shares dropped by nearly 5 per cent.
The United Arab Emirates have ended the negotiations over the £6bn deal despite the personal intervention of Prime Minister David Cameron during his visit in the Middle East.
“BAE Systems and the UK Government have been in discussions with the Government of the United Arab Emirates regarding a range of defence and security capabilities including the potential supply of Typhoon aircraft,” BAE said in a statement. “The UAE have advised that they have elected not to proceed with these proposals at this time.”
BAE Systems has hoped to make the United Arab Emirates its fourth export market after Saudi Arabia, Oman and Austria. Though the deal has never been included into BAE’s financial outlook, the United Arab Emirates’ decision has clearly affected the investors’ perception as the BAE shares, having closed up 7.9 at 442p before Thursday's announcement, dropped 4pc when trading began on Friday.
The company has received additional blow as it failed to agree the price for 72 Typhoons for Saudi Arabia for a third consecutive year, reducing this year’s forecast earnings per share by “6p-7p” – equivalent to about £250m off operating profits, according to analysts. They had been expecting 43p of earnings.