You may well have missed it but BAe Systems, formerly known as British Aerospace, has deceide to sell its 20% stake is Airbus Industries. This in not because sales of Airbus commercial aircraft are down, rather the opposite. The position is so good that BAe has decided to make a stategic change to its business. Instead of mixing its core business of defense systems with building commercial aircraft sub-sections, it will concentrate on the military side.
The sale should yield up to £3 billion ($5.25 bn) The total UK budget for Defence, including all pay as well as buying equipment, was £32.5 bn in 2005/6 (ie the financial year ending 31 March 2006). So clearly BAe will be looking around to get into much bigger markets to justify investing that much money and getting a good return. It is likely that it will be trying to consolidate its position in the largest defense market of all – the USA. In deals that will outstrip the piddling £400 million or so the US portion represented in the P&O Ports deal, BAe will be looking to buy a major US defense contractor.
So what will be the reaction of all those in Washington who protested so much about the security of the fatherland being sold to foreigners? Well not a lot really. The US military is already BAe’s biggest client. That occured over the last year when it purchased United Defense Industries of the US. Yes, those Bradley fighting vehicles are now made by a British owned company.
So what could BAe be going after? Cleary the liles of Boeing or Lockheed would be too big but others like Northup Grunman have synegetic business like software and ship building/repair that would provide a fit for exiting BAe companies, even if purchase did require some borrowing or breakup of the company and the sale of some divisions.
This is the second diary that I have read tonite that has got me wondering…and I am NOT going to make another pot of coffee!
The UK is probably the only country that Americans would accept as an integral partner in our defense industry. But, it is unpredictable how Americans will react. It also has the effect of binding British policy to American policy. Let the UK make our tanks, and they will agree to any use of those tanks whatsoever.
From a stategic point of view, it makes sense for America. For the UK, not so much.
BAe is probably trying to avoid problems like this in the future.
Looks like BAe wants to become a more “American” company. Selling its 20% Airbus stake then makes sense in two ways. First of course by raising money and second by “distancing” itself somewhat from Europe.
It wouldn´t surprise me if – some time in the future – BAE will be essentially an American company (with an associated British division). And so avoiding US technology restrictions.
Now THAT makes a hell of a lot of sense…wonder who the buyer would be?
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International Trade (Holland + Knight) February 3, 2006 — In 2005, there were a number of changes in export control regulations and policies, as well as proposed changes that may affect the export community early in 2006. These include changes to the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), and Foreign Asset Control Regulations (FACR), as well as policy changes in the way certain rules are interpreted.
As detailed in this article, all of the major agencies involved in export control appear to be increasing enforcement efforts with more investigations, higher penalties and more cases being criminalized. In particular, the issue of access by foreign nationals to U.S. technology in the U.S. (i.e., deemed exports), continues to be a focus of the agencies driven in large part by U.S. concerns over perceived attempts by Chinese nationals to gain access to U.S. military and civilian technology.
New UK/Australia Expedited Licensing Provision
As a result of U.S. bilateral agreements with the UK and Australia, a new ITAR § 126.15 was added creating an expedited licensing procedure for license applications for defense articles and services to the UK or Australia. It is important to call attention to this provision in any application.¹
● British JSF Prospects Looking Up
“But I will not let myself be reduced to silence.”
▼ ▼ ▼ MY DIARY
network is one recently-acquired British franchise.
Patriots abound:
As for BAE:
Your taxes dollars can now go directly back to england!