GEC makes rival bid for VSEL

British Aerospace last night promised a prolonged fight against GEC's pounds 532m cash offer for VSEL, the Trident submarine builder, claiming the bid was anti-competitive and against the public interest.

BAe, which two weeks ago launched its own agreed pounds 478m offer for VSEL, said it would not allow itself to become embroiled in a price war with its rival, but believes it might be able to persuade the Government to block the deal. Dick Evans, BAe chief executive, said: 'We do not intend to make a move on price at all.'

The GEC offer of pounds 14 for each VSEL share was roundly attacked by the Labour Party as being anti-competitive.

GEC moved quickly to bolster its position by purchasing 13.7 per cent of VSEL, 5.2 million shares, through the market at the pounds 14 offer price.

The purchase, along with the one per cent of VSEL's shares owned by GEC pension funds, brings GEC near the 15 per cent ceiling it is allowed under VSEL's articles of association.

GEC's bid represents a 23 per cent premium to BAe's cash alternative of pounds 11.40 per VSEL share.

GEC said the Ministry of Defence had confirmed that it would not stand in the way of the bid, subject to certain undertakings and clearance from the competition authorities.

BAe insisted that GEC's offer was 'wholly inconsistent' with the MoD's policy in relation to defence procurement.

The bid was also attacked by Jack Cunningham, shadow secretary of state for Trade and Industry, who called for a House of Commons statement to be made on Monday. 'The GEC bid for VSEL, if successful, would create a private enterprise monopoly for warship building in England. The bid must be referred to the Monopolies and Mergers Commission,' he said.

It emerged yesterday that Sir Peter Levene, former head of procurement at the MoD, had tried to broker a joint bid for VSEL by GEC and British Aerospace last January. However, GEC backed away saying it was not interested. This made BAe think it would get a clear run if it bid by itself.

A successful takeover of VSEL would give GEC an impregnable position in surface vessels and submarines and seriously weaken BAe's attractions as a prime contractor for naval systems contracts.

GEC said that merging VSEL with GEC-Marconi Naval Systems, 'allows the UK's two principal warship suppliers to be brought together to create centres of design and manufacturing excellence for the construction of frigates, submarines and large ships for the Royal Navy and for export'.

David Newlands, GEC's finance director, said GEC- Marconi had been progressively building its capabilities in naval systems and believes that VSEL complements the Yarrow yard. Mr Newlands insisted that GEC wanted 'to do this for business reasons. It is another brick in the wall of our naval systems business.'

VSEL said it 'appreciated' GEC's higher offer but would make no recommendation to shareholders until the Government's attitude to the competition implications became clearer. VSEL has agreed to call an extraordinary meeting to change its articles of association to enable GEC to implement its offer. A similar meeting concerning the BAe offer is set for 9 November. One City analyst said that the bid by GEC is 'good and finely judged'. The offer will make little dent in the group's cash mountain. GEC is expected to generate cash of pounds 180m this year and VSEL has about pounds 290m net cash. VSEL's cash is seen as a key attraction for BAe, which at 30 September had net debt of pounds 91m.

View from City Road, page 15 (Photograph omitted)

Start your day with The Independent, sign up for daily news emails
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas