BAE could be swallowed up by European firm in unsure future

BAE could be approached by another European defence company in the wake of its collapsed bid with EADS.

The Italian defence minister Giampaolo Di Paolo said yesterday that the break down of talks opened up opportunities for Italian defence firm Finmeccanica.

“The failure of the scenario of a merger between EADS and BAE has created various openings for Finmeccanica which have to be evaluated firstly by management and then by the government,” he said.

It is understood any further consolidation of BAE would be from a European firm, rather than from a US defence firm.

“BAE is still strategically restless, and is always looking at new ideas,” a source said.

Following the collapse of merger talks, the British defence firm yesterday said uncertainty in the US, from which it derives 42 per cent of its income, would disrupt trading in the final quarter.

In a trading statement, BAE said it was “committed” to delivering value to shareholders, and looked to the future with “confidence”.