Defence giant BAE Systems has announced it is selling off 55 per cent of its UK military vehicle business to German firm Rheinmetall for £28.6m.
The deal will produce a new joint venture called Rheinmetall BAE Systems Land (RBSL), headquartered at BAE Systems’ site in Telford, Shropshire, and will preserve more than 400 jobs in the town.
The move is designed to enable the RBSL to “play a major role” in delivering the British Army’s new combat vehicle programmes.
It follows calls from German chancellor Angela Merkel for European countries to cooperate more in developing weapons systems in a bid to push back against a growing wave of euroscepticism before the European parliamentary elections in May.
“RBSL will have the potential to create hundreds of additional UK jobs, both in Telford and the wider supply chain,” BAE said in a statement.
BAE Systems already does billions of pounds worth of work for the Ministry of Defence (MoD), which is its biggest client.
Jennifer Osbaldestin, managing director of BAE Systems’ land business, said: “We are committed to evolving our combat vehicles business so that we better serve our customers’ future interests.
“Joining forces with Rheinmetall in the UK provides renewed purpose for our vehicles business and allows us to deliver products, services and technology that help land forces excel in their vital roles.
“We look forward to working together to ensure the joint venture is a trusted supplier to the British Army and our international customers.”
Rheinmetall already supplies the Ministry of Defence in vehicles systems, ammunition and technical assistance, but will looks to step up this role with the joint venture.
Ben Hudson, Global Head of Rheinmetall’s Vehicle Systems Division: “The combined capabilities of our two great companies will offer our customers a comprehensive portfolio of military vehicles and associated technologies both now and into the future.”
“We are proud to invest in the UK and expect to substantially grow the current business and the Telford manufacturing facility over the coming years.”
BAE was buoyed by Philip Hammond's most recent Budget in which he pledged an extra £1bn for defence between now and the end of next year to modernise key areas such as anti-submarine warfare.