Defence giant BAE Systems has confirmed talks over a potential merger with Airbus aircraft manufacturer EADS to create the world's biggest aerospace and defence company.
BAE said a tie-up with European Aeronautic, Defence & Space (EADS) would form a "world class" firm in its sector, with combined sales of £60 billion and around 220,000 staff. The merged group would employ around 48,000 in the UK alone.
A BAE spokeswoman said it was too early to confirm whether there would be any job losses, but stressed there was very little overlap between the two business activities.
Shares in London-based BAE soared 11% on news of the talks.
BAE said the proposed deal would be a merger, but would see BAE shareholders own 40% of the combined group and EADS shareholders own 60%.
The two groups are working on plans to create a combined firm that would retain its dual listing.
BAE said: "BAE Systems and EADS have a long history of collaboration and are currently partners in a number of important projects, including the Eurofighter."
It added: "The potential combination would create a world class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA."
BAE said that the firms were in talks with governments worldwide about the implications of such a deal, given the sensitive and secure nature of their work.
Under City takeover rules, both firms have until 5pm on October 10 to announce a deal or walk away.
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