BAe asks shareholders about bid

RUSSELL HOTTEN

At the Paris Air Show

British Aerospace is certain to delay any response to GEC's pounds 835m counter- bid for VSEL until after this week's Paris Air Show. It wants to take soundings from key shareholders and defence experts before deciding whether to top GEC's offer of pounds 21.50 per VSEL share.

Dick Evans, chief executive, said in Paris that he was undecided whether to stay in the fight. He added: "When we have had a chance to look at the details of the offer we will make an appropriate response."

Although his comments were ambivalent, they made clear that BAe has not yet given up. Many in the City predicted it would withdraw after GEC's unexpectedly high bid.

Mr Evans said the company hoped to extend its capabilities as a prime contractor to sea as well as air and land defence systems by buying the naval yard. But he described the acquisition as not crucial to British Aerospace's future.

General Electric showed no interest in VSEL until British Aerospace announced it had agreed to buy the company last year, Mr Evans said. "Acquiring VSEL is not a necessity for us . . . for us VSEL is a growth opportunity. For GEC it is a must which is clearly reflected in what GEC is prepared to pay."

Referring to the sharp rise in VSEL's share price since the bid battle started, he added: "If I was a GEC shareholder I would be asking why we should be prepared to pay pounds 21.50 a share for something that we could have had for pounds 3 a share three years ago."

BAe does not want the VSEL battle to overshadow this week's show, one of the most important for several years, where it hopes to secure large military and commercial business.

UK defence analysts attending the show said BAe executives were trying to calm nerves after GEC's larger-than-expected all-cash offer. They said BAe had expected GEC to play a cat-and-mouse game for VSEL, and were knocked back by Lord Weinstock's attempted killer blow.

According to the terms of BAe's recent "rights" issue to fund the VSEL purchase, shareholders can veto any offer, a clause designed to stop the company from over-paying.

One analyst who had met BAe yesterday believed that the company would meet the remainder of its most important institutional shareholders after the air show and would make an announcement at the end of next week. However, he said: "Sentiment is against BAe getting into a macho war with GEC. Maybe BAe just wants Lord Weinstock to sweat a bit before the company bows out gracefully."

BAe was heartened last week with only a moderate fall in its share price on the day GEC announced its offer. The further BAe's share price falls, the harder it is for the company to raise the value of its all-paper offer.

BAe executives met the French President, Jacques Chirac, on Saturday and it is thought they discussed the merger of France's Matra with BAe's missiles business. The merger has been dogged by French political in-fighting and a decision is not now expected until September.

Also Roger Freeman, the UK defence procurement minister, is due to meet BAe today to discuss the current pounds 2bn bid for the Army's new attack helicopter.

Meanwhile, BAe was today due to formally unveil details of a joint marketing and manufacturing plan for Saab's Gripen fighter aircraft.

The deal would be extremely important for BAe as it would fill the gap between its sophisticated Eurofighter and low-cost Hawk aircraft.

BAe would have 45 per cent of the joint venture and Saab the rest, and some production work would be switched to BAe's Cheshire plant. "It will be real work in real British Aerospace factories in the UK," a senior BAe director said. "Saab gets the benefit of our marketing expertise, and we get a new product that fits well with our current range." Even an executive from a rival firm said yesterday that the logic of the deal could not be faulted.

The deal is likely to be controversial, however, because Saab will be accused of a cynical attempt to get around Sweden's strict export restrictions on arms sales to politically incorrect regimes.

Teal Group, the US defence consultants, yesterday estimated that there could be export potential for 2,700 of the fighter-aircraft, worth $88bn, over the next 10 years.

News
Ian Thorpe had Rio 2016 in his sights
people
Sport
world cup 2014LIVE BLOG: Hosts Brazil take on the Netherlands in third-place play-off
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
life...and the weight loss industry is rubbing its hands in glee
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
arts + entsReview: Wembley Stadium ***
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice