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BAE Systems and VT abandon talks around potential Babcock bid
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| 11 May 2006 |
By Guy Anderson JDI Editor
BAE Systems and VT Group have abandoned talks concerning a joint takeover of UK naval services group Babcock International, arguing that the surge in the company's share price meant it no longer offered 'shareholder value'.
In a joint statement to the London Stock Exchange on 10 May, the companies told investors: 'BAE Systems and VT announced that they were engaged in exploratory discussions with respect to a potential joint offer for Babcock. These discussions have now ceased.'
The takeover of Babcock would have heralded the consolidation of the UK's shipbuilding industry, in line with the stated aim of the Ministry of Defence (MoD).
A source within VT Group told Jane's that both VT and BAE Systems may still push ahead with moves to restructure the country's naval sector, adding 'I wouldn't discount further activity'.
BAE Systems has also indicated that it will continue the push towards consolidation.
In a separate statement to investors at 4.36pm on 10 May, Europe's largest defence company said: 'BAE Systems will continue to consider alternative options to restructure the UK naval surface ship and submarine sectors, in line with HMG's [Her Majesty's Government's] policy set out in the Defence White Paper published in December 2005.'
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