BAE eyes $2bn US assets sale

BAE SYSTEMS, Britain’s largest defence contractor, has put parts of its US commercial aerospace operation on the block in a move that could raise up to $2bn (£1.3bn).

In a step to trim its none-core operations ahead of government defence spending cuts in London and Washington, BAE is understood to be soliciting bids for segments of its “platform solutions” subsidiary. One of the units up for sale makes aircraft engine controls and cockpit avionics, while the other manufactures hybrid engines for buses.

Investment bankers from JPMorgan and Wells Fargo are said to be advising on the potential disposals. First-round bids are expected within the next four weeks. As well as private equity firms, rivals Moog, Honeywell and Hamilton Sundstrand are expected to show an interest.

The news comes amid signs of dire times approaching for companies exposed to reductions western governments’ defence budgets.

Last week, BAE chief executive Ian King said he had been asked by ministers to provide detailed financial costs on cancelling both of the planned Royal Navy aircraft carriers. King warned the defence select committee axing the £5bn programme would put Britain’s entire shipbuilding industry at risk. The company also said it would shed 1,000 jobs, mostly in its military air division.

BAE declined to comment on any plans to divest assets in the US.