What now for Vickers? Having tied up the deal to dispose of Rolls-Royce for £340m more than double the original offer from BMW it can now contemplate the route taken by so many other diversified industrial groups: re-focusing on that core business.
In keeping with the current business trend, some of the cash from the sale will be returned to shareholders. But what about the rest? For Vickers, the biggest business and profit potential now lies in two main areas: defence systems, and marine propulsion. The smaller Cosworth vehicle engineering operation could also use some investment to strengthen its market position.
The strategy for marine propulsion will be to turn it into a global leader. The immediate fortunes of Vickers’ defence business though will be clearer at the end of this week, when the successful bidders for the MRAV battlefield taxi are announced.
If GKN wins that contract with its German partner companies, then celebrations at Vickers over the BMW sale might come to an abrupt end. Rival defence group GKN will be in a strong position, and not only from the MRAV. It is also eyeing up a possible deal with Italian helicopter maker Agusta.
This matters to Vickers because it may still be interested in buying GKN’s armoured vehicles division. GKN, with its run of success in winning contracts, might consider that it will get more value from this sector by holding on to this business.
That would leave Vickers cash rich but suffering from a lack of suitable acquisitions to spend it on. It may also leave it vulnerable to eventual take-over.