BAE Systems has a market capitalisation of 10.7 billion pounds and debt of 1.23 billion pounds as of June 2012.
BAE Inc, however, expects U.S. defence spending cuts to hit its business in the coming years so any sale would need to happen sooner rather than later.
The United States, by far the largest market for weapons, already has plans in place to cut $487 billion from its defence budget over the next decade, while Congress could also make a further $500 billion in military spending cuts in January under a process known as sequestration.
EADS is keen on a deal to balance its civil aviation exposure with more defence work, while BAE would gain access to planemaker Airbus, allowing it to diversify at a time when defence budgets around the world are contracting.
In recent years BAE has been throwing cash into its cyber security business, Detica, to help offset budget cuts and contract losses across its more lucrative traditional business of fighter jets and warships. This has failed to plug the hole.
BAE bought Detica in 2008 and has since pushed the cyber crime-fighting business into the commercial arena. It handles data and national security information for governments and is expanding further into telecoms, media and financial services.
Part of the Eurofighter consortium that lost out on the sale of 126 jets to India earlier this year, BAE expects to deliver only modest growth in 2012 -- and that hinges on talks to renegotiate a jets deal with Saudi Arabia -- one of its five ‘home markets’.
BAE has cut thousands of jobs in recent years to combat spending cuts. Headcount at its land and armaments business, where sales fell 40 percent last year reflecting the end of a key vehicle programme and reduced military operations, has halved since 2009. It plans to cut at least 2,000 jobs as Typhoon orders slow.