Qatar deal sends BAE Systems shares near two-month high
Qatar’s plans to buy 24 Typhoon aircraft have boosted BAE Systems’ shares on the FTSE 100.
Shares in BAE Systems were hovering near a two-month high after Qatar’s defence minister signed a letter of intent to buy 24 Typhoon aircraft from Britain.
The agreement was signed on Sunday during a visit to the Gulf state by Defence Secretary Sir Michael Fallon, who said it marked the UK’s “first major defence contract” with Qatar.
He said: “This is an important moment in our defence relationship and the basis for even closer defence co-operation between our two countries.
“We also hope that this will help enhance security within the region across all Gulf allies and enhance Typhoon interoperability across the GCC.”
The news boosted the share price of aerospace defence firm BAE Systems, which is set to manufacture the 24 jets out of its plant in Lancashire.
Shares in the FTSE 100-listed company rose 3.1% or 18.5p to a near-two month high of 614.5p.
The firm said in a statement: “BAE Systems welcomes a formal Statement of Intent between the governments of the UK and Qatar signed today in Doha on the potential purchase of 24 Typhoon aircraft for the future military and training requirements of the Qatar Armed Forces.
“Discussions are ongoing and it would be inappropriate to comment further at this time”.
David Madden, a market analyst at CMC Markets UK, said that while the value of the sale was not disclosed, it was “ likely to be in excess of £1 billion”.
The resulting share price boost has helped BAE Systems recover from the knock it took in August, when it announced that it would take a restructuring charge for its intelligence division.
“That announcement sent the stock to a six-month low,” Mr Madden said.
However, interest in the firm has continued to build.
“Last month, Goldman Sachs added the stock to its conviction buy list, sighting Saudi Arabian contracts as the reason behind the move, and now they are selling to Qatar too.”