Hampshire-based military pyrotechnics and decoy supplier Chemring is well into talks with a mystery defence company which put in a bid for it earlier this month, a UK defence source said this week.
Chemring itself will not expand on a statement of 4 February in which it announced that it had received a bid from another party, and that it was being evaluated.
Analysts say potential bidders include a range of UK companies such as British Aerospace-owned Royal Ordnance, Marconi Electronic Systems (with which BAe is anyway to merge), Cobham, Smiths Industries and Ultra Electronics. Foreign bidders for Chemring might include Thomson-CSF in France and several US firms including Marconi-owned Tracor.
Chemring made a £1.25m return to profit when it announced its results for the year to 31 October 1998, but in January the company complained that the British Government’s export licensing policy was hampering its sales.
Shares jumped 49% on news of the bid.