BAE Systems and VT Group were today reported to be close to completing a £1bn (€1.48bn) merger of their shipbuilding assets.
The tie-up, which the Times newspaper said could happen in about five weeks, is being driven by the Ministry of Defence’s desire for industry consolidation ahead of a £4bn (€5.9bn) aircraft carrier project for the Royal Navy.
The Ministry also believes that one national champion will stand a better chance of winning export orders in the future. It will also allow the companies to concentrate on specialist skills rather than duplicating operations.
BAE Systems and VT Group said in December that they were in early discussions regarding the combination of their surface ship and naval support businesses.
Last year, they ditched a £700m (€1.03bn) takeover of engineering group Babcock, which provides specialist services to the MoD at Faslane and Coulport on the Clyde.
BAE and VT already work together on MoD contracts, with VT building the bow and mast sections for the Royal Navy’s Type 45 Destroyer programme at Portsmouth and the rest of the work and assembly being done by BAE at Glasgow.
BAE’s Glasgow yards are at Govan and Scotstoun and employ 3,800 people. VT’s operations at Portsmouth have a workforce of more than 800 people.