James Bond's gun maker set to buy Heckler & Koch

BAE Systems is poised to sell Heckler & Koch, its German handgun and rifle maker. The sale is awaiting formal approval from the US and UK defence ministries, both of which are Heckler & Koch customers.

The purchaser is a German investor group headed by Umarex, which owns CarlWalther, maker of the legendary Walther PKK handgun favoured by James Bond.

Heckler & Koch makes the G36 rifle used by the German, Spanish and British armies. It also supplies special forces such as the SAS and its German equivalent, GSG-9, with handguns and machine guns.

The British army accounts for around one-fifth of Heckler & Koch's sales.

Based in south-west Germany and employing around 500 people, Heckler & Koch is believed to have sales of some £90m. While the company might fetch a similar amount, BAE Systems has had some difficulty finding a buyer. A sale to US gun- maker Colt fell through.

Phil Soucy, a spokesman for BAE, admitted: "It has been thought for some time that it does not form part of our strategy. It is a profitable business that's very much at the top end of the gun market."

BAE Systems has a strategy of concentrating on "hi-tech" weapons systems. Heckler & Koch manufactures machine guns, hand guns and grenade launchers, as well as rifles.

The MP5, frequently used by special forces, has become the world's most popular submachine gun, while the HK P7 is one of the world's most famous handguns.

The Mark 23 handgun is used by the US Navy Seals and US Army Special Operations Command. Heckler & Koch enjoys a strong reputation for product development. Its latest weapons are made almost entirely of high-strength polymers.

Heckler & Koch has been involved in the controversy surrounding the SA-80 assault rifle used by the British Army. It was asked to help upgrade the rifle, manufactured by British Ordnance, after it jammed repeatedly in the Gulf War. However, there have been recent reports of the upgraded SA-80 A2 failing in Kosovo and Afghanistan.