Armor Holdings purchase opens many options for BAE, says analyst

BAE Systems now has a "multiplicity of organic options in land and armaments" following its USD4.53 billion purchase of Armor Holdings, a leading defence industry analyst has said.

It emerged on 31 July that the agreement - the UK group's largest deal to date - had been concluded. Land systems specialist Armor Holdings, which has an 8,000-strong payroll, reported sales of USD2.6 billion for 2006 and is expected to add revenues of USD3 billion to BAE Systems' US business.

"It has nearly doubled the size of its armoured vehicles business. It has made a huge step," the analyst said, adding: "It's nearly the same size as General Dynamics."

He also told Jane's that while the acquisition of Armor Holdings "takes BAE down the value-add chain [as "Armor is low tech"], sophistication is not a priority".

"Military vehicles is the only part of the market that's growing and BAE has bought into it," the analyst added.

In its announcement of the completion of the Armor deal, BAE said that its global marketing presence would "enhance Armor Holdings' ability to offer tactical wheeled vehicle replacement in overseas markets". Regarding foreign business for the US company, the source said: "I doubt there'll be any." 201 of 677 words