Information AboutBae Systems |
BAE Systems plc is the world's third largest Defence Contractor ,3 the largest in Europe , and a commercial aerospace products manufacturer. BAE is a British company based at Farnborough , England , which has worldwide interests, particularly in North America through its subsidiary BAE Systems Inc . BAE was formed on 30 November 1999 with the Merger of British Aerospace (BAe) and Marconi Electronic Systems (MES), the defence arm of The General Electric Company (GEC). BAE is the successor to many iconic aircraft and defence electronics companies, including The Marconi Company , the first commercial company devoted to the development and use of radio; A.V. Roe And Company , one of the world's first aircraft companies; De Havilland , manufacturer of the world's First commercial Jet Airliner ; BAC , co-manufacturer of the Concorde Supersonic Transport ; and Supermarine , the manufacturer of the renowned Spitfire . It has increasingly disengaged from its businesses in continental Europe in favour of investing in the United States. Since its formation it has sold its shares of Airbus , Astrium , AMS and Atlas Elektronik . BAE Systems is involved in several major defence projects, including the F-35 Lightning II , the Eurofighter Typhoon and the Royal Navy ''Queen Elizabeth'' Class aircraft carriers. The company has been the subject of criticism, both general opposition to the arms trade and also specific allegations of unethical and corrupt practices, including the Al Yamamah contracts with Saudi Arabia that have earned BAE and its predecessor GB£43 billion in twenty years.4 HISTORY The merger of British Aerospace and Marconi Electronic Systems was announced on 19 January 1999 .BAE Systems Annual Report 1999 22. BAE Systems plc (2000). Retrieved on 2006-10-27 . MES was acquired by British Aerospace for GB£ 7.7 billion.5 Heritage formation]] As a result of the British Aerospace-MES merger, BAE Systems is the successor to many of the most famous British aircraft, defence electronics and warship manufacturers. Marconi Electronic Systems had a heritage of almost 100 years. Following GEC's acquisition of Marconi in 1968 the Marconi brand was used for its defence businesses, for example Marconi Space & Defence Systems (MSDS). GEC's history of military products dates back to World War I with its contribution to the war effort then including radios and bulbs. World War II consolidated this position, as the company was involved in important technological advances, most notably Radar . Between 1945 and 1999, the company became one of the world's most important Defence Contractor s. GEC's major defence related acquisitions included Associated Electrical Industries in 1967, English Electric (including its Marconi subsidiary) in 1968, Yarrow Shipbuilders in 1985, Plessey companies in 1989, parts of Ferranti 's defence business in 1990, Vickers Shipbuilding And Engineering in 1995 and Kværner Govan in 1999. In June 1998, MES acquired Tracor , a major American defence contractor, for GB£830 million (approx. US$ 1.4 billion c.1998).6 British Aerospace was the result of massive consolidation of UK aircraft manufacturers since World War II. British Aerospace was formed on 29 April 1977 by the nationalisation and merger of The British Aircraft Corporation , the Hawker Siddeley Group and Scottish Aviation . Both BAC and Hawker Siddeley were themselves the result of various mergers and acquisitions; BAC incorporated English Electric Aviation , Vickers-Armstrong (Aircraft) , the Bristol Aeroplane Company and Hunting Aircraft , while Hawker Siddeley was formed by Hawker Aircraft's purchase of aviation businesses including Gloster Aircraft , Armstrong Whitworth Aircraft , A V Roe and later merger with De Havilland in 1959. The acquisition of Folland and Blackburn Aircraft followed, and in 1960 this group was consolidated as the Hawker Siddeley Group. Formation It was widely anticipated that British Aerospace would merge with Germany’s DaimlerChrysler Aerospace (DASA) to form a pan-European aerospace giant.7 A merger was agreed between BAE Chairman Richard Evans and DASA CEO Jürgen Schrempp .8 However when GEC put Marconi Electronic Systems up for sale, Evans abandoned the merger with DASA in favour of purchasing Marconi. Evans stated that in 2004 that his fear was that an American defence contractor would acquire Marconi and challenge both British Aerospace and DASA. Schrempp was angered by Evans' actions and chose instead to merge DASA with Aerospatiale to create the European Aeronautic Defence and Space Company ( EADS ). This group was joined by Spain’s CASA following an agreement in December 1999. 17 undertakings were given by BAE Systems to the Department Of Trade And Industry which prevented a reference of the merger to the Monopolies And Mergers Commission . These were largely to ensure that the integrated company would tender sub-contracts to external companies on an equal basis with its subsidiaries. Another condition was the "firewalling" of former BAe and MES teams on defence projects such as the Joint Strike Fighter . In 2007 the government, on advice from the Office Of Fair Trading , announced it had agreed to release BAE from 10 of the undertakings due to "a change in circumstances."9 The attraction of MES may well have been Tracor,10 which was the largest European defence purchase in the United States at that point. The creation of a UK company, compared with what would have been a British–German firm, made the possibility of penetrating the US defence market more likely. Since its creation the company has steadily increased its investment in and revenues from the US. At the same time, continental European companies have made limited moves into that market. Major European companies such as Thales and EADS have yet to be awarded, for example, a position relative to BAE Systems' involvement in the F-35 Joint Strike Fighter programme. BAE Systems inherited the "special" shareholding that was established when British Aerospace was privatised. This special share, with a nominal value of GB£1, is held on behalf of the Secretary Of State For Trade And Industry . This shareholding prevents amendments of certain parts of the company's Articles Of Association without the permission of the Secretary of State.11 These Articles require that no foreign person or persons acting together may hold more than 15% of the company's shares or control the majority of the board and that the CEO and the Chairman of BAE Systems must be British nationals. Expansion and restructuring In 2000 Matra Marconi Space , a joint BAE/ Matra company, was merged with the space division of DaimlerChrysler Aerospace to form Astrium . On 16 June 2003 BAE sold its 25% share to EADS for £84 million. However due to the lossmaking status of the company BAE invested an equal amount for "restructuring".12 In November 2001 , BAE announced the closure of the Avro Regional Jet ( Avro RJ ) production line at Woodford and the cancellation of the Avro RJX, an advanced series of the aircraft family. The final Avro RJ to be completed became the last British civil airliner. BAE continues to support operators of its products through BAE Systems Regional Aircraft . In December 2001 BAE's missile businesses were merged into MBDA, in which it acquired a 37.5% stake. This included its share of Matra BAe Dynamics and the missile division of Alenia Marconi Systems . On 16 March 2006 the '' Financial Times '' reported the possible sale of BAE's 37.5% share of MBDA , with EADS said to be keen to take full control of the joint venture.13 In June 2002 , BAE confirmed it was in takeover discussions with TRW , an American aerospace, automotive and defence business. This was prompted by Northrop Grumman 's GB£4.1 billion (approx. US$6 billion c.2002) hostile bid for TRW in February 2002. A bidding war between BAE, Northrop and General Dynamics ended on 2002-06-01 when Northrop's increased bid of GB£5.1 billion was accepted. On 11 December 2002 , BAE issued a shock profit warning due to cost overruns of the Nimrod MR4 maritime reconnaissance/attack aircraft and the Astute SSN projects.14 On 2003-02-19 BAE Systems took a charge of GB£750 million against these projects and the Ministry Of Defence (MOD) agreed to pay a further GB£700 million of the cost.15 In 2000 the company had taken a GB£300 million "loss charge" on the Nimrod contract which was expected to cover "all the costs of completion of the current contract".16 In July 2003 BAE Systems and Finmeccanica announced their intention to set up three joint venture companies, to be collectively known as Eurosystems . These companies would have pooled the avionics, C4ISR and communications businesses of the two companies. However the difficulties of integrating the companies in this way lead to a re-evaluation of the proposal, BAE's 2004 Annual Report states that "recognising the complexity of the earlier proposed Eurosystems transaction with Finmeccanica we have moved to a simpler model." The main part of this deal was the dissoloution of AMS and the establishment of SELEX Sensors And Airborne Systems . In late March 2007 BAE Systems sold its 25% share of SELEX Sensors And Airborne Systems to Finmeccanica for €400 million (c. GB£270 million 2007).17 In May 2004 , it was reported that BAE Systems was considering selling its shipbuilding divisions, BAE Systems Naval Ships and BAE Systems Submarines . It was understood that General Dynamics wished to acquire the submarine building facilities at Barrow, while Vosper Thornycroft was said to be interested in the remaining yards on the Clyde . As Of 2007 BAE Systems is in the process of merging its naval shipbuilding operations with those of VT Group , an aim which is central to the British Government's Defence Industrial Strategy .1819 On 23 March , 2006 BAE and VT Group announced that they were considering a joint bid for Babcock International . On 10 May , 2006 , BAE Systems abandoned the plan because "the economics of a deal do not create sufficient value for BAE Systems or the other parties".20 family of armoured vehicles to its product line.]]On 4 June 2004 , BAE Systems outbid General Dynamics for Alvis Vickers , the UK's main manufacturer of armoured vehicles. On 7 March 2005 BAE Systems announced the GB£2.25 billion (approx. US$4.2 billion c.2005) acquisition of the USA defence company United Defense Industries (UDI). UDI, a major competitor to General Dynamics, was primarily a land systems manufacturer, boosting BAE Systems' involvement in this sector. UDI, now BAE Systems Land And Armaments , manufactures combat vehicles, artillery systems, naval guns, missile launchers and precision guided munitions. In December 2005 , BAE announced the sale of its German naval systems subsidiary, Atlas Elektronik , to ThyssenKrupp and EADS. The sale was complicated by the requirement of the German government to approve any sale. The ''Financial Times'' described the sale as "cut price" due to the fact that French company Thales bid € 300 million, but was blocked from purchasing Atlas on national security grounds.21 On 31 January 2006 BAE announced the sale of BAE Systems Aerostructures to Spirit AeroSystems, Inc. 22 BAE said as early as 2002 that it wished to dispose of what it did not regard as a "core business".23 On 18 August 2006 Saudi Arabia signed a contract worth GB£6 billion to GB£10 billion for 72 Eurofighter Typhoon s, to be delivered by BAE Systems.24 On 10 September 2006 BAE was awarded a GB£2.5 billion contract for the upgrade of 80 Royal Saudi Air Force Tornado IDS s.25 One of BAE's major aims, as highlighted in the 2005 Annual Report, was the granting of increased technology transfer between the UK and the US. The F-35 (JSF) programme became the focus of this effort, with British government ministers such as Lord Drayson , Minister For Defence Procurement , suggesting the UK would withdraw from the project without the transfer of technology that would allow the UK to operate and maintain F-35s independently. However on 12 December 2006 , Lord Drayson signed an agreement which met the UK's demands for further participation. The agreement allows "an unbroken British chain of command" for operation of the aircraft.26 On 22 December 2006 BAE received a GB£947 million contract to provide guaranteed availability of RAF Tornados.27 On 7 May 2007 BAE Systems announced its susbidiary BAE Systems Inc. was to purchase Armor Holdings for GB£2.3 billion (c. US$4.5 billion 2007).28 The company is a manufacturer of tactical wheeled vehicles and a provider of vehicle and individual armour systems and survivability technologies. Following the approval of regulators and Armor Holdings shareholders, BAE announced the completion of the merger on 31 July 2007 .29 Airbus shareholding See Also: Airbus BAE Systems inherited British Aerospace's share of Airbus Industrie , which consisted of two factories at Broughton and Filton . These facilities manufactured wings for the Airbus family of aircraft. In 2001 Airbus was incorporated as Airbus SAS , a Joint Stock Company . In return for a 20% share in the new company BAE Systems transferred ownership of its Airbus plants (known as Airbus UK ) to the new company. Despite repeated suggestions as early as 2000 that BAE wished to sell its 20% share of Airbus, the possibility was consistenly denied by the company.30 However on 6 April 2006 BBC News reported that it was indeed to sell its stake, then "conservatively valued" at GB£2.4 billion.31 Due to the slow pace of informal negotiations, BAE exercised its Put Option which saw investment bank Rothschild appointed to give an independent valuation. Six days after this process began, Airbus announced delays to the A380 with significant effects on the value of Airbus shares. On 2 June 2006 Rothschild valued BAE's share at GB£1.87 billion, well below BAE's, analysts' and even EADS' expectations.32 The BAE board recommended that the company proceed with the sale. On 4 October 2006 shareholders voted in favour and the sale was completed on 13 October .33 PRODUCTS programme. It manufactures the aft fuselage, horizontal and vertical tails, as well as various aircraft systems.]] |
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