US step for BAE Systems

Dec 27 2007 by Peter McCusker, The Journal

DEFENCE giant BAE Systems has taken a new step into the US market with the acquisition of military support services firm MTC Technologies.

BAE is paying $448m (£225.9m) including debt for the Ohio-based business, which provides technical support to the country’s air force and army.

The deal follows a major expansion of BAE’s US presence in May when it agreed to buy military vehicles and body armour manufacturer Armor Holdings for £2.3 billion.

MTC also works for the US intelligence agencies and its contracts cover areas including research, development, engineering, program management and information technology.

BAE Systems said the deal came amid “significant opportunities” for growth among businesses offering support services across the US military.

It plans to merge the business, which has 2,900 employees, with its current customer solutions business, based in Arlington, Virginia.

The company added: “The combination of MTC with BAE Systems is an outstanding fit with very complementary offerings, and will position the organisation to bring proven capabilities to a broader spectrum of customers.”

The deal is subject to approval from MTC’s shareholders and regulatory clearance and is expected to be completed in the first half of next year. With 96,000 employees worldwide, BAE System achieved sales of £13.7 billion and profits of more than £1 billion last year.

Earlier this year it unveiled a multi-million pound plan to guarantee the future of its factory on Scotswood Road, Newcastle, which built the first World War I tanks. Over £15m is being spent on the plant to ensure it is ready to build the tanks of tomorrow, as part of the Ministry of Defence’s Future Rapid Effects System (Fres) programme.