BAE set to merge UK shipyards

The merger of six UK naval shipyards has moved closer after an outline agreement was reached between the British government and defence group BAE Systems, it was reported today.

BAE is understood to be willing to combine its two shipyards on the River Clyde and its submarine base at Barrow-in-Furness in Cumbria with those owned by rival contractors.

The move would see the creation of a single company that runs BAE’s shipyards with yards owned by VT Group, Babcock and Swan Hunter at Portsmouth, Rosyth and Wallsend respectively.

The Ministry of Defence and other British government departments have expressed a desire to formulate a national naval strategy to support military shipbuilding in the UK.

According to The Sunday Telegraph, the strategy will be on the agenda when UK government officials meet with the defence contractors on October 11.

BAE announced in April that it was reviewing its naval shipbuilding businesses and said all options, including the retention or sale of the businesses, were under consideration.

Chief executive Mike Turner told investors earlier this month that the division was not expected to contribute to shareholder value in the short term.