BAE Systems, VT joint venture surfaces as UK approves carrier construction
By Guy Anderson, Editor, Jane's Defence Industry
25 July 2007
UK shipbuilders VT Group and BAE Systems said on 25 July that they would push ahead with the formation of a surface ship joint venture. The announcement came concurrently with the UK government's announcement that construction of the Royal Navy's two new aircraft carriers had been approved.
The companies - which together account for 85 per cent of UK naval shipbuilding - confirmed previous announcements that the venture will focus on surface ship construction and longer-term support.
The London Stock Exchange reacted favourably to the announcement: shares in VT Group and BAE Systems had increased by 2.8 per cent to 643 pence and 1.92 per cent to 438.75 pence respectively as of 1400 GMT on 25 July.
It is estimated that - based on Fiscal Year 2005 figures - that the as-yet unnamed entity will have annual revenues in excess of GBP700 million (USD1.4 billion) in addition to a staff of 6,850 divided between the groups' respective sites in Portsmouth and Glasgow.
BAE Systems and VT Group will hold 55 per cent and 45 per cent of the venture respectively, but will have equal voting rights on the board.
VT Group told Jane's that the venture remains subject to both regulatory and shareholder approval, but is expected to launch in the fourth quarter of the current year.
UK Defence Secretary Des Browne said orders were being placed for two new aircraft carriers for the Royal Navy.
The GBP3.8 billion contract will lead to the construction of two new 65,000-tonne carriers - HMS Queen Elizabeth and HMS Prince of Wales - which will enter service in 2014 and 2016.
The contract was described as a "major project" for the shipbuilding industry by UK Prime Minister Gordon Brown.
Defence Secretary Des Browne added: "I am pleased that VT Group and BAE Systems intend to form a joint venture in naval shipbuilding and support. The creation of such a joint venture will enable the Royal Navy to work with the industry to deliver the infrastructure the navy will need to support the fleet in the future while retaining all three of our existing naval bases at Portsmouth, Devonport and Faslane." © 2006 Jane's Information Group