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BAE Land & Armaments Sector

The Land & Armaments Sector is a global leader in the design, development, production and service support of armored combat and tactical vehicles, major and minor caliber naval guns and missile launchers, canisters, artillery systems and intelligent munitions, employing more than 7,700 people. With headquarters in Arlington, Virginia, the global business has operations in the UK, South Africa, Sweden and North America, with markets in more than two dozen countries.

The Sector's primary focus is to provide breakthrough technology solutions, world-class systems integration capabilities, flexible manufacturing capabilities and superior integrated logistics support throughout the product life-cycle. It maintains industry leadership in advanced technologies that focus on enhancing survivability, lethality and mobility.

The main characteristic of the UK AFV Industry since 1995 was its rapid consolidation - from five or more prime companies (GKN Defence, Alvis, Vickers Defence Systems, RO Defence, Marconi Defence Systems etc) to one, BAE Systems Land Systems. Drivers for this consolidation include: low profit margins; the significant number of UK national programmes that have not reached product maturity leading to gaps in work load; a lack of competitive export products; a decline in the global export market following the end of the Cold War; and changes in national defense requirements.

On March 7, 2005 United Defense Industries, Inc. announced that it had entered into a definitive merger agreement with BAE Systems North America Inc., the U.S. subsidiary of BAE Systems plc. BAE Systems will acquire all of the outstanding shares of United Defense for $75.00 per share in cash. With the assumption of United Defenses $217.7 million of debt (as of December 31, 2004), the value of the transaction would be approximately $4.2 billion. The closing of the transaction is subject to certain terms and conditions customary for transactions of this type, including receipt of stockholder approval and necessary regulatory approvals and was expected to be completed in the second quarter of 2005.

clearly what BAE Systems got with United Defense is deeper penetration into the U.S. military market, said Loren Thompson, chief operating officer with the Lexington Institute, a defense think tank in Washington. Thompson noted BAE Systems previously acquired from Lockheed Martin Corp. Sanders, the largest producer of electronic warfare equipment, as well as legacy electronics operations of General Dynamics Corp. You put that together with United Defense, its clear that theres a long-term strategic vision to become one of the major defense contractors in the American market, which of course is the dominant market in the world, he said.

This group was established in June 2005 from the newly acquired United Defense Industries, Inc. and the existing Land Systems (formed by the integration of RO Defence and Alvis in 2004). The United Defense acquisition elevated BAE Systems to the second largest supplier in the global land systems market. The former United Defense activities have been integrated with BAE Systems Land Systems, which comprised the former RO Defence and Alvis activities including Hagglunds. Integration of these operations has resulted in a single US headquartered global land systems business with operations in the US, UK, Sweden and South Africa, with markets in more than two dozen countries.

The Land & Armaments business is shaped by the contracts awarded for its products by primarily the governments of the US, the UK and Sweden. The success of the business results from its history of securing key government contracts and the ability to satisfy customer needs in its various home and export markets. In the US, the Armys requirement to restore its current systems to combat-ready condition following extensive operational use and to upgrade and remanufacture to the most advanced configurations is the subject of one of the largest ongoing programs being undertaken by the group.




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