Buyout attempt endangers BAe's planned sale: Employees claim DTI backing for bid to take over business jet operation

Click to follow
BRITISH Aerospace has run into opposition over the planned pounds 250m sale of its business jet operation to Raytheon of the US, confirmed yesterday.

Richard Hooke, a former senior executive with BAe, plans to launch a counter-bid involving management and employees and says he has the support of the Department of Trade and Industry.

Mr Hooke said yesterday that so far he had been denied the information he needed to make a formal bid despite assurances to the contrary given at a meeting with Richard Lapthorne, BAe's finance director. 'We have been frozen out of the deal,' he said. 'I cannot see the logic of it.'

The DTI confirmed that it recently asked BAe to ensure equal treatment for Mr Hooke's proposals. A spokeswoman said: 'The takeover may be referred to us anyway. There is a possible question over the transfer of the business from BAe to Raytheon.'

Raytheon makes Beech small business aircraft but is best known for its Patriot anti-missile system, used during the Gulf war.

BAe Corporate Jets leads the market for medium-range business jets, worth up to dollars 1bn a year. The sector has been characterised by increasing consolidation during the past year because of the cost of developing new models. BAe's main rivals include Cessna, now taken over by Textron of the US, and Learjet, which has been bought by Bombardier of Canada.

British Aerospace announced its intention a year ago to sell the corporate jet operation, which makes the BAe 125 range. Last July Mr Hooke, who was with BAe for 14 years, was asked to develop a plan for a potential management buyout. BAe withdrew the business jet company from the market last September and Mr Hooke left BAe in January to pursue his own buyout. He said he had the backing of one of Europe's largest investment funds and a clearing bank and could make a bid within seven days.

The jet company, which has factories at Chester and Hatfield, Herts, employs almost 1,000 people in the UK and 400 in the US. Recently its headquarters were transferred to Little Rock, Arkansas, raising fears about the future of jobs in Britain.

Mr Hooke said: 'Of course I am interested in protecting UK jobs, but this is not nationalistic. I would hope that the BAe board would consider it in the interests of shareholders to consider an alternative bid.'

BAe said that the planned pounds 250m cash sale resulted from an approach made by Raytheon and that no other proposal of any substance had been made. A spokesman said that the sale posed no direct threat to the workforce at Chester and Hatfield.

Raytheon has agreed to continue buying airframe parts from BAe's Airbus division for at least three years. The spokesman said that the jets would continue to be assembled in the UK before going to the US to be fitted out.

In January British Aerospace said it planned to put its regional jet aircraft operations into a joint venture with Taiwan Aerospace. However, that agreement has yet to be finalised.

The group, which wants to concentrate on defence and its Airbus partnership, is also seeking a partner for the turboprop aircraft business, which makes the Jetstream range.

View from City Road, page 26