Tuesday, March 08, 2005

Gnashing of teeth

Completely frustrating EU plans to amalgamate European defence industries, BAE Systems today are reported by the Telegraph to have "unveiled its biggest deal for six years", the $4 billion (£2.3 billion) acquisition of US rival United Defense Industries, maker of the Bradley armoured fighting vehicle.

The deal means that Britain's biggest defence company is reducing its reliance on the Ministry of Defence. When the transaction is completed, BAE's biggest customer will be the US Department of Defence, not the Ministry of Defence. It will generate 25 percent of BAE's revenues against the MoD's 20 percent.

As an increasingly American-oriented business, BAE Systems is nicely insulated from the blandishments and control of the EU commission and, tapped into US technology and contracts, can afford to take an increasingly independent line. There must be a certain amount of gnashing of teeth in the MoD today.

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