Babcock lands support deal

BABCOCK International has signed a £140m deal with the Ministry of Defence to buy the Defence Support Group, which maintains and repairs military equipment and stores tanks and other land vehicles.

The deal includes a ten-year contract with Babcock to maintain, repair and overhaul the British Army’s vehicles and light weapons, including Challenger tanks and Warrior armoured vehicles, which carry infantry soldiers into combat.

As well as the proceeds from the sale, which was launched by the government in March, the Army is also expected to benefit from considerable savings.

Defence equipment minister Philip Dunne said the deal would provide better value for the taxpayer and transform the support the Army relies on at home and overseas.

‘The £140m proceeds from the sale and the significant savings over the life of the contract represent outstanding value for money for the taxpayer and will allow us to continue to focus our resources on the front line,’ he said.

Babcock (down 13p at 1048p) reckons the work will be worth around £2bn during the lifetime of the contract.

The contract is due to complete on March 31 with the work beginning on April 1.

DSG is based in Andover, Hampshire, but also employs people in Shropshire, Dorset, North Yorkshire, Essex, Wiltshire, Gloucestershire and Stirling.

Its air division, the Electronics and Components Business Unit, is being retained by the MoD and will become the Defence Electronics and Components Agency.