VT Group has UK Defence Support Group in its sights

UK support services company VT Group is keen to acquire the UK Ministry of Defence's (MoD) Defence Support Group (DSG) should it be put up for sale under UK government moves to shrink defence procurement costs.

VT is currently eyeing potential acquisition targets under a strategy that is underpinned by a GBP400 million (USD670 million) 'war chest', following the GBP346 million sale of its 45 per cent shareholding in naval shipbuilding venture BVT Surface Fleet Ltd to former majority shareholder BAE Systems: a deal which was completed on 30 October.

Commenting on specific targets during a 17 November press briefing, VT Chief Executive Paul Lester said: "MoD spares and logistics [operations], for example DSG, would be a natural fit for us."

With an annual turnover in excess of GBP200 million and personnel of 3,800, DSG provides in-house maintenance, repair, overhaul, upgrade and support services for the UK armed forces' air and land systems. It was formed through the April 2008 amalgamation of state-owned organisations, the Army Base Repair Organisation (ABRO) and the Defence Aviation and Repair Agency.

Asked by Jane's whether VT views the DSG as currently for sale, Lester replied: "I suspect a new [government - the UK is expected to hold a general election in 2010] regime would sell it [DSG] as fast as they can."

He conceded that "no decisions have been made yet" but noted that "senior civil servants are preparing themselves" for a potential sell-off of the organisation, as part of a wider drive to reduce costs against ever-tightening budgets.