IE 11 is not supported. For an optimal experience visit our site on another browser.

BAE says no plans for L-3 bid

BAE Systems, Europe's largest defense firm, said on Tuesday it had no plans to bid for U.S. group L-3 Communications Holdings Inc.  or to sell its stake in plane maker Airbus, denying a newspaper report.
/ Source: Reuters

BAE Systems, Europe's largest defense firm, said on Tuesday it had no plans to bid for U.S. group L-3 Communications Holdings Inc. or to sell its stake in plane maker Airbus, denying a newspaper report.

"It is simply not correct. It is way off target," a BAE spokesman said.

Britain's Guardian newspaper had reported that BAE Systems was considering a $10 billion bid for L-3 Communications to strengthen its position in the U.S. military market.

The newspaper said BAE was expected to fund the deal by selling its 20 percent stake in European plane maker Airbus, which it estimated would fetch between 3 billion pounds and 4 billion pounds ($5.3 billion to $7 billion).

Airbus is 80 percent owned by top European aerospace firm EADS and 20 percent owned by BAE Systems.

A spokeswoman for L-3 could not be reached for comment.

Defense analyst Loren Thompson of the Virginia-based Lexington Institute said BAE did a significant amount of intelligence work for the U.S. military and was probably the only foreign company that could be permitted to acquire a company like L-3 with all its sensitive contracts.

L-3, the Pentagon's ninth-largest contractor, posted a better-than-expected fourth-quarter profit of $151.4 million on January 31, helped by strong demand for its electronic cockpit equipment and secure network systems for government customers.

The company was also upbeat about prospects, citing strong Pentagon spending in communications, intelligence and security. The New York-based company has grown into a leading middle-tier defense contractor via a string of acquisitions.

When BAE Systems posted a 16 percent rise in full-year operating profit on February 23, Chief Executive Mike Turner said the company, which has been actively building up its U.S. operations in recent years, would pursue more U.S. acquisitions.

"Yes, that is something we will continue to look at. It has got to add shareholder value," he said at the time.

Two months earlier, at a Reuters Aerospace and Defense summit in Washington, Robert Murphy, chief financial officer for BAE's North American unit, echoed such U.S. growth aspirations.

"It's still by far and away the world's largest defense market. We believe we're well positioned where those markets lie," he told Reuters at the time. "Just scooping up assets is not what it's about, it's got to have strategic value."