Vickers is on the verge of announcing several strategic deals that will resolve the future of its armoured vehicles business.
The company, which lost out last year in the bid for the pan-European `battlefield taxi’, has been studying the future of its armoured vehicles business. Orders for its Challenger 2 tank run out in the next two years and the company badly needs a partner to drive the division forward.
After announcing half-year results last week, chief executive Baron Paul Buysse said: `What we’re trying to do is find the most effective way, at the lowest cost, of being in a new sector of the market by combining the strengths in Vickers Defence with other partners.’
Buysse’s comments were taken as an indication that the company is to move into the market for smaller, lighter vehicles, where there are more potential customers than for main battlefield tanks.
City rumours have linked the group with Swiss company Mowag, and reports at the weekend named South African armoured-car maker Reumech as a bid target.
One City source has claimed that talks between the two companies could result in a takeover agreement within the week.
Buysse denied suggestions that the company was considering a light armoured vehicle partnership with Giat, the state-owned French defence group. The group already has one joint venture with Vickers.
Buysse said such a move was unlikely because of structural and cultural differences between the two: `I hope we will be able to announce decisions or joint ventures that would create a new platform for Europe for Vickers Defence Systems alongside the battle tanks.’
Vickers’ results, meanwhile, were well received in the City, showing a big improvement on the same period last year: pre-exceptional profits were £35.2m, compared with £18.8m in the first half of last year.
The figures included a 24% increase in group sales to £428.9m. This included £58.1m from marine propulsion group Ulstein, which exceeded expectations after being integrated with Vickers’ existing operations in this area.
However, the company warned that it plans to restructure its marine propulsion business. Such a scaling back of operations could result in job losses among the 450-strong workforce in Scotland.
The division also employs around 4,250 workers in Scandinavia.
Details of the restructuring are expected to be made public in October.
Copyright: Centaur Communications Limited