Britain’s BAE Systems, the world’s top maker of military equipment, is selling some of its North American commercial aerospace business, the Wall Street Journal reported on Saturday.
The auction could yield up to US$2 billion for BAE, the Journal said, citing people familiar with the matter.
The units collectively have about US$200 million in earnings before interest, taxes, depreciation and amortization. Initial bids were expected to come in as early as next week.
Among the units said to be put up for sale are one that makes aircraft engine controls for General Electric Co and a division that makes hybrid propulsion systems for buses and trucks.
INTERESTED PARTIES
Rival aerospace and industrial component manufacturers such as Rockwell Collins Inc, Woodward Governor Co or Moog Inc, as well as private equity firms such as Warburg Pincus, Carlyle Group and transportation-focused shop Greenbriar Equity Group LLC may be interested in some or all of the assets, according to the Wall Street Journal.
BAE Systems had US$36.2 billion in sales last year, making it the world’s second-largest defense company by revenue.
On Thursday, BAE Systems said it planned to cut about 740 UK jobs at its division supplying parts for military aircraft such as Lockheed Martin Corp’s F-35 Lightning II ahead of an expected cut in that government’s defense spending.
JOB CUTS
The unit employs 15,000 and the cuts may affect sites in Brough, Chadderton, Warton and Samlesbury in northern England, and Farnborough, west of London, spokeswoman Leonie Foster said. The company employs about 107,000 people globally.
The UK is due to complete its review of defense and security capabilities by the end of next month as the government aims to cut a record budget deficit.
Findings from the review will help fuel the UK’s Chancellor of the Exchequer George Osborne’s Oct. 20 announcement on spending cuts.
CUTTING COSTS
Lockheed Martin, the world’s largest arms supplier, said on Wednesday about 25 percent of its executives opted for a voluntary retirement program designed to cut costs as US defense spending slows.
Any compulsory firings at BAE will be opposed by unions, according to Hugh Scullion, general secretary of the Confederation of Shipbuilding and Engineering Unions.
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