BAE triumphs in tank battle

BAE Systems looks poised to take control of UK tank manufacturer Alvis after an eleventh-hour swoop to snatch the company from its would-be US buyer.

Alvis seemed certain to join US defence group General Dynamics, which made a £310m bid for the company last month. The US offer had received the blessing of Alvis’s board and was seen as so final it had even been cleared by competition regulators.

But BAE trumped General Dynamics with a last minute offer of £355m, prompting the Alvis directors to switch allegiance to their fellow UK group and recommend their shareholders follow suit.

BAE already owned 29 per cent of Alvis, and announced that it had secured the backing for its shareholders representing a further 16 per cent of the company’s stock, leaving it in a near unassailable position. The move by BAE came as a surprise, as the group had given no indication it was interested in bidding when General Dynamics made its original offer.

The UK aerospace and defence giant said the acquisition would allow it to strengthen its position in land-based military systems and compete for major contracts in the armoured vehicle sector. London-based Alvis has manufacturing facilities in the UK, Scandinavia and South Africa, and exports armoured vehicles to about 60 countries.

BAE, which has been dogged by reports of a breakdown in relations with its largest customer, the UK MoD, was quick to stress that the deal with be ‘to the benefit of the UK’s armed forces.’

The sale to BAE will please those observers of the UK defence sector who argue that too much of the nation’s military engineering capability is being placed under foreign control.

In the most recent example of the trend, military helicopter manufacturer AgustaWestland is set to pass into Italian hands after GKN, the UK engineering group, agreed to sell its 50 per cent stake in the company to Finmeccanica.

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