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.

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