18th Jan 2008 07:00
BAE SYSTEMS PLC18 January 2008 18/1/08 BAE Systems announces agreement to acquire Tenix Defence BAE Systems has today entered into an agreement to acquire the companiescomprising Tenix Defence, a leading Australian defence contractor, for up toA$775 million (£356 million) in cash. Tenix Defence comprises four wholly owned businesses and two joint ventureinterests. Terms have been agreed to acquire the wholly owned business for A$686million (£315 million). Subject to pre-emption rights not being exercised, thejoint venture interests will form the remainder of the transaction. TenixDefence divisions comprise: • Tenix Land: a leading military vehicle supplier and provider of through life support to the Australian Defence Force with an additional presence in defence services • Tenix Aerospace: a provider of systems integration, modification and support activities, including through-life support, across a number of major aircraft platforms • Tenix Electronic Systems: an information and defence electronics business with a core capability in technology and subsystems development • Tenix Marine: a leading provider of maritime acquisition and support programmes in Australia, New Zealand and the South East Asian region The two joint ventures are RLM, with Lockheed Martin, which provides ongoingsystem upgrade, maintenance and support services for the Jindalee OperationalRadar Network and Tenix Toll Defence Logistics, with Toll Logistics, whichmanages warehousing, engineering, distribution and maintenance activities forthe Australian Defence Force. Tenix Defence will be integrated with the operations of BAE Systems Australia,headquartered in Adelaide. The acquisition of Tenix Defence more than doubles BAE Systems' presence inAustralia making it the largest in-country defence supplier to the AustralianDefence Force. With over 5,500 people and annual sales of over A$1.2 billion(£550 million) the company will deliver enhanced capabilities in the Land, Sea,Air and Joint domains. The organisations are an excellent fit and have largelycomplementary programmes and capabilities. The acquisition of Tenix Defence is a significant step in the implementation ofBAE Systems' strategy to develop as the premier global defence and aerospacecompany. Australia is one of BAE Systems' six home markets and has attractiveprospects arising from the Australian Government's commitment to increasedefence spending by 3% per annum in real terms until 2015-16 and its preferenceto maintain a strong national defence capability. For the twelve month period ended 30 June 2007, Tenix Defence generated proformaEBITDA of A$56 million (£26 million) on sales of A$699 million (£321 million). The proposed acquisition is expected to deliver a return in excess of BAESystems' cost of capital in the first full year following the proposedacquisition. Commenting on the proposed acquisition, Mike Turner, Chief Executive of BAESystems, said: "I am delighted that we have agreed to acquire Tenix Defence,which will transform our business in Australia." Jim McDowell, Chief Executive of BAE Systems Australia, added: "Thistransaction significantly enhances the depth and breadth of our capabilities inAustralia and adds a major naval business to our portfolio and significantlyincreases our land capability. The combination of the two companies will enableus better to equip and support the Australian Defence Force for many years tocome." The purchase consideration is subject to customary post completion adjustments.Completion is conditional upon certain regulatory clearances, other third partyconsents and final verification of certain matters and is expected in the firsthalf of 2008. BAE Systems has been advised in this transaction by Lehman Brothers. Notes (1) All numbers included in this announcement assume that the joint ventures form part of the transaction. (2) An exchange rate of £1 : A$2.18 has been applied in this announcement. Issued by: BAE Systems plc London This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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