VT and BAE continue merger talks

The MoD is urging the VT Group and BAE Systems to join forces in a bid to merge their established shipbuilding assets before Christmas. Both companies are currently undergoing negotiations to consolidate what remains of the UK?s shipbuilding industry.

Plans initially fell through at the beginning of the year when third party company, Babcock, refused to lower its price for its ship-repair facilities, Babcock eventually backed out of further negotiations.

VT Group and BAE Systems are once again in talks, with added pressure from the MoD, to “create a national champion in shipbuilding”. In a plan to speed up proceedings, the MoD is using the Royal Navy?s future procurement programme, an aircraft carrier contract, as leverage. The CVF project which will cost £3 billion, is expected to be given the go ahead by Christmas, the same time as VT and BAE are expected to merge.

VT chief executive Paul Lester said: “Clearly, CVF is one of the carrots being used by the MoD, but there is more to it than that. We also have to talk to the MoD about how much of the savings from consolidation the industry can keep and how much we pass to the Government.”

If the alliance is not made and the CVF opportunity missed, the MoD has voiced concerns that the industry could once again move into a bust period, with the possibility of job losses and closures.