UPDATE 1-BAE Systems nears Oman-Eurofighter deal-sources

Tue Jul 3, 2012 9:23am EDT

Related Topics

* Oman deal for 12 Eurofighters could be worth $2 bln

* BAE still believes it can land bigger UAE deal

* Defence contractor battling lower defence budgets

* Also eager to recoup lost orders

By Rhys Jones

LONDON, July 3 (Reuters) - Britain's BAE Systems Plc , battling shrinking European and American defence budgets and eager to recoup lost orders, is close to selling 12 Eurofighter Typhoon jets to Oman, according to sources close to the deal.

Analysts estimate the sale could be worth up to $2 billion to Europe's biggest defence contractor.

"BAE and Oman are close to an agreement for 12 Eurofighters," one source told Reuters on Tuesday.

BAE is also in talks to supply 60 Eurofighters to the United Arab Emirates (UAE) if the Gulf Arab state's deal with France's Dassault falls through, one of the sources said.

The UAE was expected to finalise a $10 billion agreement with Dassault last year but the talks faltered after the UAE said the terms were uncompetitive and unworkable.

"The UAE fighter competition has a long way to run yet," a source close to the talks said.

Earlier this year BAE's Eurofighter consortium lost out on the sale of 126 fighters to India which chose the Dassault Rafale as preferred bidder.

But the Eurofighter consortium, made up of BAE, Italy's Alenia and European aerospace and defence group EADS, has an amended bid ready if the Dassault deal collapses.

It is also bidding to supply fighters to Malaysia.

BAE in May signed a 1.6 billion pounds ($2.5 billion) deal to supply Saudi Arabia with Hawk jets to train pilots to fly the Eurofighter which it has already ordered from UK company. {ID:nL5E8GN3PT]

The deal provided some welcome relief for the British defence giant, whose shares have risen 7.5 percent in the last month and were 0.2 percent down at 290.1 pence by 1250 GMT, valuing the company at around 9.4 billion pounds.

Saudi Arabia - the world's top oil exporter - signed a contract with BAE in 2007 to buy 72 Typhoon aircraft, 24 of which have been delivered to the Royal Saudi Air Force. The Salam deal, as it is known, is worth around 4.5 billion pounds.

Talks between BAE and Saudi over changes to the price of the deal are still expected to be completed in the second half of 2012.

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