Publication: The Scotsman Issued: Date: 2004-06-04 Reporter: Nick Bevens

BAE Strikes to Snatch Alvis from under US Giant's Nose

 

Publication 

The Scotsman

Date 2004-06-04

Reporter

Nick Bevens

Web Link

www.news.scotsman.com

 

BAE Systems, Europe’s biggest military contractor, has agreed to buy UK tank maker Alvis for £355 million in a last-minute move that looks to have scuppered a rival £309m bid previously tabled by US giant General Dynamics.

BAE said last night the board of Alvis - manufacturer of the Challenger tank - had recommended its 320p-a-share offer, withdrawing its earlier recommendation for a 280p bid by the larger US military contractor.

Crucially, BAE also said it had managed to get irrevocable undertakings from hedge funds holding 16,2 per cent of Alvis shares to back its bid. BAE already owns 29 per cent of Alvis so the hedge fund support means the company now has 45 percent of votes backing its bid, just 5 per cent shy of the 50,1 per cent required by UK takeover laws for a full takeover to proceed.

The 11th hour agreed bid will come as a huge blow to General Dynamics, which last month won permission from the European Commission to buy Alvis, its only British rival in the tank business.

General Dynamics, which makes the Abrams main battlefield tank used by the US military, also postponed until 7 June a deadline to allow shareholders to back its deal after just 17,35 per cent of investors backed the offer.

A takeover by General Dynamics would has been the largest in a string of European acquisitions by the US defence firm involving military vehicle makers in Austria, Spain and Switzerland. All eyes will now be on General Dynamics to see if it will respond with a higher counteroffer.

With acknowledgements to Nick Bevens and The Scotsman.