BAE Systems will further consolidate its position in the U.K. naval market with the acquisition of VT Group’s share in their BVT joint venture. VT is deciding to exercise its right to sell its 45% stake early as a result of the present economic climate and the opportunity for acquisitions.
The deal – worth a minimum of £380 million ($544 million) – has already been approved by the British Defense Ministry. VT anticipates being in a position to exercise the option by the beginning of July. BVT was established in mid-2008, created by bringing together the two companies' surface ship businesses.
The establishment of BVT was a direct result of the UK’s 2005 Defense Industrial Strategy, which stressed that “industry re-structuring” was a priority. Setting up BVT was also a key to the progress of the Royal Navy’s next-generation aircraft carrier program.
“Our exit from BVT Surface Fleet later this year will enable us to refocus exclusively on expanding our core engineering based support services offerings,”says VT Group chief executive Paul Lester. The company is looking at possible acquisitions either in the UK or in the U.S.A.
The share sale remains dependent on the Defense Ministry and BVT agreeing on a long-term naval surface-ship build-program covering a 15-year period.
As part of the overall deal the VT Group will also make a contribution to BVT as a result of delays of two offshore patrol vehicle contracts for Oman and Trinidad and Tobago. This will be around £23 million out of the estimated total of £50 million. There are also discussions ongoing between VT and BAE Systems about additional capital related to these two export programs. The VT patrol vessel contracts were secured before the creation of BVT.
Picture credit BVT