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£73m BAE buy fuels takeover hopes

13 April 2012

SPECULATION about consolidation in Britain's defence industry took off today as BAE Systems bought GKN's 29% stake in Britain's only remaining armoured vehicles maker, Alvis, for £73m.

Alvis shares gained 25p to 219 1/2p on hopes of a BAE bid. A BAE spokesman said: 'We have no current interest in bidding for the remaining shares, though we reserve our position if a third party made an offer.'

BAE and Alvis are developing the Future Rapid Effects System, armoured vehicles suited to modern armies.

The BAE buy will require the consent of the German regulator as Alvis is the British partner in the Artec consortium, which includes Germany's Krauss-Maffei Wegmann and Rheinmetall. It is building prototype multi-role armoured vehicles known as Boxers.

GKN acquired the stake in September 1998 when it sold its armoured vehicle interests to Alvis. GKN topped the best blue-chip performers, up 8 1/4p to 259 1/4p.

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