GEC Set to Buy Submarine Maker VSEL as Other Suitor Drops Out
LONDON (AP) _ British Aerospace PLC withdrew its bid Wednesday for submarine maker VSEL PLC, clearing the way for a rival bid from Britain’s General Electric Co. PLC.
British Aerospace said it would not be in its interests or those of its shareholders to match GEC’s offer that values the maker of the Trident nuclear submarine at $1.34 billion.
``We made this decision only after considerable analysis as we remain committed to extending our proven skills in prime contracting and systems integration into the naval arena,″ chief executive Dick Evans said.
``However, even with the very significant commercial and taxation benefits available to us, the outlook for VSEL’s profits as the Trident program winds down″ would make a higher bid uneconomical, he said.
On May 31, British Aerospace offered to buy VSEL for about $25.60 a share, or $1.08 billion, in cash.
GEC had offered on Feb. 8 to pay about $34.40 a share in cash for VSEL.
Earlier offers by both companies lapsed after government regulators announced last year that they would investigate takeover bids for VSEL. A GEC takeover would combine Britain’s two principal warship makers.
A majority on the Monopolies and Mergers Commission opposed the GEC offer, but Trade Secretary Michael Heseltine overruled the panel in May, saying both GEC and British Aerospace were free to bid for VSEL.
GEC has said it wants to make VSEL’s shipyard in Barrow-in-Furness, in northern England, an international producer of submarines and large ships, while it will continue to build frigates at GEC’s Yarrow shipyard, near Glasgow, Scotland.
VSEL last month announced a 5.7 percent increase in pre-tax profits in the year ending March 31.