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Defense merger moves closer
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December 7, 1998: 6:59 a.m. ET
British Aerospace in "relatively advanced" talks on a deal
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LONDON (CNNfn) - Consolidation in the European defense sector made progress Monday, but serious hurdles remain.
British Aerospace (LSE:BA) said in a statement it was in "relatively advanced" talks with "other parties" about pulling off a deal.
No names were mentioned, but Dasa, the aerospace arm of DaimlerChrysler has been in talks with BAe for some time.
Part of the talks are believed to be aimed at creating a corporation for plane maker Airbus Industrie, rather than simply a consortium or a partnership. These have been held up as the various partners which control Airbus jockey for position.
Dasa owns 37 percent of Airbus, the same as France's government-owned Aérospatiale, with BAe holding 20 percent and Spain's Casa controlling the remainder.
Talks over the weekend aimed at turning the Airbus consortium into a corporation ran into some turbulence, with Aérospatiale reportedly demanding a 50 percent share in the company.
Reports suggest the French group is concerned that it will have only a minority role if BAe and Dasa get together. They would then control about 57 percent of Airbus.
Previous statements from BAe and Dasa have indicated Aérospatiale could join them in a powerful European defense alliance. The U.K. and German companies are said to be refusing to let Aérospatiale into any agreement however, while the French group remains under state control.
In London BAe shares rallied more than 3 percent to 513 pence. As speculation of a merger has grown they have soared from about 310 pence in early October.
DaimlerChrysler shares in Frankfurt were 3.5 marks higher at 154 marks.
From staff and wire reports.
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