Defence company BAE systems said it has finally signed a price escalation agreement with the Saudi Arabia government over the supply of Typhoon fighter jets to the country.

No figures were given on the deal. The original agreement, signed nine years ago between the UK and Saudi governments, included provision for the Typhoons to be bought at 2005 economic conditions.

"Both governments have now agreed price escalation terms relating to the Typhoon aircraft under the Salam programme and these have been reflected in contractual arrangements between the UKG and BAE Systems," BAE said.

"The terms of the agreement are broadly consistent with the group's prior trading outlook for 2013."

Cash settlement is expected to follow the deal starting in the early part of this year, BAE said in a statement.

"This is an equitable outcome for all parties, I am pleased that we have been able to conclude this negotiation which builds on our long standing relationship with this much valued customer," said BAE Chief Executive Ian King.

BAE shares were up 11.10p, or 2.5 pct at 448.7p at 08.43.

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