Filed under: Business Line, Companies, Countries, Egypt, Events, Press Releases, production program, VT Group
VT HALTER MARINE WINS US$165M CONTRACT TO BUILD 4TH FAST MISSILE CRAFT
Bringing total project value to US$807m
Pascagoula, MS, 29 March, 2010 – VT Halter Marine Inc. (VT Halter Marine), a subsidiary of VT Systems Inc. (VT Systems), today announced that it has secured an undefinitized contract in excess of US$165m with the US Navy for a fourth Fast Missile Craft (FMC) for the Egyptian Navy. This most recent contract brings the total value for the FMC project to approximately US$807m. Work on this fourth FMC will commence by mid 2011 and delivery is expected by end of 2013. VT Halter Marine has begun construction on the first FMC which it expects to deliver by mid 2012.
VT Halter Marine announced on 1 December 2005 that it had secured the initial Phase I functional design contract for approximately US$29m. Two subsequent contract modifications were awarded in November 2006 and June 2007 respectively for procuring the FMC project’s long lead items which added US$206.5m to the contract. Subsequent changes in the scope of work further increased the Phase I contract value to US$249.2m. With the award of Phase II of the FMC project in September 2008, the total contract value awarded to VT Halter Marine for the first three FMCs amounted to US$642m. This latest US$165m contract reflects non-recurring cost reductions from the first three vessels contracted earlier and government furnished equipment which was previously provided by VT Halter Marine.
The FMC is designed to perform coastal patrol, surveillance, interdiction, surface strike and naval battle group support for the 21st century. The vessels will allow the Republic of Egypt to maintain the security of its coastal regions for both itself and friendly countries, while denying access to the areas by any potential adversaries. Each vessel will be approximately 62m in length and will incorporate ship signature control technology. High speed and maneuverability are two of the ship’s primary assets to fulfill these roles. The vessels will also incorporate numerous combat system assets and electronic sensors, equipping the vessels with capabilities in anti-aircraft, anti-surface and electronic warfare.
“Halter Marine is proud to partner with the US Navy in the construction of a fourth state-of-the-art FMC vessel, contributing towards the US Government’s maritime strategy which helps to secure partners around the world.”
Chief Executive Officer, VT Halter Marine
VT Halter Marine, the marine operations of VT Systems, is based in Pascagoula, Mississippi and is a leader in the design and construction of medium-sized ships in the United States. VT Halter Marine designs, builds and repairs a wide variety of ocean-going vessels such as patrol vessels, oil recovery vessels, oil cargo vessels, ferries, logistic support vessels and survey vessels. Please visit www.vthaltermarine.com.
VT Systems is a diversified company providing solutions to the commercial and government markets in the aerospace, electronics, land systems and marine sectors. VT Systems products and services include aircraft inspection, maintenance and modification; software solutions in training and simulation; satellite-based IP communications technology; network solutions that integrate data, voice and video; rugged computers and computer peripheral equipment; specialized truck bodies and trailers; weapons and munitions systems; road construction equipment; and shipbuilding. Headquartered in Alexandria, Va., VT Systems operates globally and is a wholly owned subsidiary of ST Engineering. Please visit www.vt-systems.com.
Fri February 19, 2010 7:31am EST
LONDON (Reuters) - VT Group (VTG.L) is considering asking Britain's Takeover Panel to impose a 'put up or shut up' deadline on suitor Babcock International (BAB.L), a source close to VT told Reuters on Friday.
"The thought process has started and it is likely in the near future that they will do," the source said.
The Takeover Panel could impose a deadline for VT either to make a firm bid or walk away for a minimum of six months.
On Thursday, VT rejected a revised approach from Babcock worth up to 715 pence a share or 1.29 billion pounds ($1.98 billion) and set its sights on an offer closer to 800 pence.
Babcock has said it will not go hostile, as it will need access to VT's books before following through with an offer.
February 19, 2010
The takeover battle between Babcock International Group PLC (BAB.LN) and VT Group PLC (VTG.LN) ignited late Thursday when Babcock's largest shareholder branded the bid for VT "a deal too far," U.K. newspaper The Times reported on Friday.
In a significant setback for Babcock, Andy Brough, a fund manager with Schroders, which controls nearly 10% of Babcock's shares, said that he had supported Peter Rogers, the deal-doing chief executive of Babcock, in previous bids, but could not support him in his pursuit of VT.
Thursday, Babcock raised its approach for VT to between 680p and 715p, from 633p, The Times said. Babcock increased its offer after taking soundings from some of its shareholders--but not, it would seem, Brough, The Times said.
Labelling Rogers' offer "a crazy price", Brough said: "He's always wanted to do this. But GBP7 a share? Why does Babcock have to bet the ranch on one deal? At this price, it looks like VT shareholders will be walking off into the sunset while Babcock is left trying to generate the value."
February 18, 2009
LONDON (Dow Jones)--Babcock International Group PLC (BAB.LN), an engineering support services company announced Thursday it rised its bid for VT Group PLC (VTG.LN), to an new value range of between 680 pence and 715 pence per VT share.
-The revised proposal represents a significant improvement to the terms set out in Babcock's previous proposal to VT.
-The revised proposal is depending on the value of merger benefits identified during the required due diligence process. This range
-*a premium of between 33.9% and 40.7% to VT's mid-market closing price of 508 pence per share on Feb. 12, 2010 (being the last full trading day prior to the announcement by Babcock of a possible offer for VT)
-*an exit multiple of 20.4 - 21.4 times VT's historic earnings
-*excluding the BVT Exit Proceeds, a premium of 45.1 - 54.2% to the value of the current ongoing operations of VT
-The consideration would comprise a mixture of cash and Babcock shares, with an exchange ratio of 0.701 Babcock shares for each VT share and the balance in cash.
-In view of the strategic logic, The company believes that the proposed combination represents a compelling growth story and provides an opportunity which should be explored in full by both companies.
-Babcock is committed to working towards a recommended transaction and establishing a constructive dialogue with VT. Babcock believes there to be significant commercial logic underpinning the combination of the two companies, and that it remains in the interests of VT shareholders for the Board of VT to engage with Babcock.
-Babcock is disappointed that the Board of VT has to date been unwilling to do so.
Editorial: Comment: Lockheed Martin may fly to the defence of VT Group (Times newspaper Feb 17, 2010)Lockheed Martin may fly to the defence of VT.
The article written by Robert Lea, David Robertson and Miles Costello included the following quote regarding possible 'white knights' to beleagured VT Group (although leading with Lockheed Martin), "VT counterbidders could be Boeing, the American aerospace group, and Thales and Finmeccanica, the European defence companies."
Whilst an impressive enough group, just which one would want to purchase a VT Group minus its naval shipbuilding business in 2010 ? The American contractors no doubt could find the resources to purchase the company but what shareholder rationale would be justifiable ? VT may have businesses in the US defense realm, but whilst substantial from a UK perspective they are most definitely a small, niche player by US standards.
Lockheed Martin would be keen to access VT's flight training contract with RAF, plus there could be a vague synergy between nuclear support services and LM's position with the nuclear deterrent - however to buy the entire company and divest the businesses not core to LM would be somewhat nonesensical from a shareholder standpoint - plus the company has bigger fish to fry in the USA concerning potential exposure to some$600m in penalties from the JSF program.
Boeing seems a little illogical to throw into the mix of potential counter bidders - in the UK, Boeing had no real defence presence until a few years ago when it was informally suggested by MINDES Lord Drayson, and was focused on the FRES land systems program - no real fit - plus given the focus on Dreamliner and the C-17 program would Boeing want to be seen to be investing time and resource into buying an education business ?
On the European front had this scenario come to pass a few years ago you could imagine Thales being keen to make the play. The company's high-water mark with the UK Ministry of Defence was around 5 years ago when Thales upstaged BAE Systems in the battle for the CVF aircraft carrier program. Since then reputations have waned as price has driven much of MOD commercial activity plus pressure from the major player in the UK. VT having divested itself of the shipbuilding business (and therefore a rationale to get back into the aircraft carrier programm proper) diminishes Thales interest beyond the specialist communications business of VT in the UK.
Finmeccanica has been on a purchasing spree in recent years, of which the Augusta-Westland helicopter acquisition was most politically visible. Whilst one could never rule out Italian corporate impulsiveness the support services business is not the same as new build of defence equiupment and therefore creates difficulty articulating a sound rationale for acquiring the business.
In summary, the idea of a white knight is always a good ploy ahead of a real negotiation concerning take-down price however for VT Group management finding a real white knight may squander valuable whilst institutional shareholders are re-running their financial models as to the benefits to them of a Babcock International Group acquisition. The story of merging VT training assets and nuclear support services under a strong Babcock management remains compelling at this time.
Feb 15, 2010 - VT Group spurns Babcock bid) reported a VT Group spokesman as saying that, "We believe Babcock is strategically challenged because we think they will be heavily exposed to defence [spending] cuts in a new administration,".
However the statement seems a little at odds with the facts;
* The exposure of Babcock to the Ministry of Defence is primarily on the Naval support from as well as work for Defence Estates. In the latter Babcock is the only company to lead two of the five regional prime contracts - splitting the MoD need for infrastructure services across five geographic districts.
* In terms of naval support and new build the UK Government is deeply committed to the Future Aircraft Carrier (CVF) programme and Rosyth, after a long battle, emerged as the site where work performed by BAE Systems (and before that VT prior to divesting its shipbuilding arm) will integrate the sections of the new vessels (Rosyth having the only closed basin and dry docks of sufficient size to handle the project in the United Kingdom. Such large vessels which have a projected service life of some 50 years will need the security of such facilities for major overhauls or emergencies.
With regard to naval support the Acquisition of DML from Halliburton KBR in 2007 put Babcock in the position of being the only player in nuclear submarine support to the Royal Navy. Refit on the four Vanguard Class nuclear deterrent submarines and hunter killer (T-Class) boats has a schedule dictated by the laws of physics rather than the MOD Commercial branch - providing an important and very stable revenue - something which noone would wish to tamper with for safety reasons.
The scope for cutbacks in the naval domain with regard to Babcock is therefore minimal.
Concerning infrastructure services whilst some cuts can no doubt be made one of the major UK political imperatives is to be seen to looking after its servicemen and their families to prevent a) unnecessary reductions in personnel and b) to avoid electoral discomfort. Therefore the Defence Primes will no doubt see price pressure when renegotiation is due but fundamentally the activity has to be done.
Looking beyond defence there are many areas where Babcock has made the strategic shift and has its ducks in a row whereas VT Group is coming late to the game. In the area of nuclear support, babcock acquired Alstec in 2006 and has been building a nuclear support business to which VT Group assets could be added.
Babcock exposure to South Africa has long been beneficial given infrastructure and the raw materials industry. VT Group could add a complimentary US defense venture where Babcock has the knowledge from its years with the UK MOD to be able to build a strong niche position. babcock network services business - supporting the power sector as well as communications could have major synergies with VT Group's Merlin communications business.
In summary there is little doubt a takeover of VT Group would bolster the strong Babcock International Group's support services business and whereas Babcock has been through the pain of reorganisation, VT Group is only just embarking upon the process having sold its ship-building business to BAE Systems - are institutional investors prepared to wait a few years to see the benefits of a solo approach versus Babcock applying their skills to harness VT Group's expertise now in a larger combine ?
February 15, 2010
VT Group plc (“VT” or the “Company”) notes the announcement by Babcock International Group plc (“Babcock”) and confirms that it received a preliminary approach from Babcock on 3 February regarding a possible offer for the Company.
The Board carefully considered, together with its advisers, Rothschild and Merrill Lynch International, the preliminary approach, which relies on the return of the net cash proceeds from the exit of BVT, of which VT shareholders already have the benefit, and concluded that it was strategically unsound and at a level which substantially undervalued the Company and its prospects. The Board was unanimous in rejecting this approach.
This proposal follows on from two similar approaches made by Babcock last summer, which the Board of VT also considered carefully and rejected at that time.
Babcock’s proposal would have resulted in VT shareholders holding shares in the enlarged group. VT has pursued over the last five years a successful growth strategy of developing a broader based support services business, with reduced exposure to MoD. With the acquisition of DML in 2007, Babcock has by contrast increased its exposure to the MoD marine sector. A combination with Babcock would therefore represent a retrograde step in VT’s strategy and would increase VT shareholders' exposure to MoD cut backs.
The Board of VT believes that Babcock faces serious strategic challenges and that VT has a clear and established growth strategy focused on support services that would be further enhanced by the addition of Mouchel.
This announcement has not been made with the consent of Babcock and there can be no certainty that an offer will be forthcoming or as to the terms of any offer.
The Directors of VT accept responsibility for the information contained in this announcement. To the best of knowledge and belief of the Directors of VT, who have taken all reasonable care to ensure such is the case, the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the “Code”), if any person is, or becomes, “interested” (directly or indirectly) in 1% or more of any class of “relevant securities” of VT or Babcock, all “dealings” in any “relevant securities” of that company (including by means of an option in respect of, or a derivative referenced to, any such “relevant securities”) must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the “offer period” otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an “interest” in “relevant securities” of VT or Babcock, they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all “dealings” in “relevant securities” of VT or Babcock by Babcock or VT, or by any of their respective “associates”, must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose “relevant securities” “dealings” should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel’s website at www.thetakeoverpanel.org.uk.
“Interests in securities” arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an “interest” by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the Panel’s website. If you are in any doubt as to whether or not you are required to disclose a “dealing” under Rule 8, you should consult the Panel.
N.M. Rothschild & Sons Limited (“Rothschild”) and Merrill Lynch International (“MLI”), which are authorised and regulated by the Financial Services Authority in the United Kingdom, are acting for VT and for no one else in connection with the subject matter of this announcement and will not be responsible to any person other than VT for providing the protections afforded to clients of Rothschild and MLI, nor for providing advice in relation to the subject matter of this announcement or any matter referred to herein. Neither Rothschild nor MLI nor any of their subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Rothschild or MLI in connection with this announcement, any statement contained herein or otherwise.
Filed under: Business Line, Companies, Contract Awards, Countries, England, Events, logistics, Military Aviation, production program, Scotland, Services, VT Group
Despite the budget problems facing Great Britain due to the costs of operations in Afghanistan and the current recession the Labor Government of Gordon Brown continues to move out on some major programs. A few days ago it was to begin construction of the new centralized contractor provided training facility in Wales. Yesterday the first sub-contracts to begin construction of the two new aircraft carriers for the Royal Navy were announced.
These total over $600 million and went to a five different companies across the country. The building of the two ships will be the biggest defense program in England for several years and are critical to the economy of Scotland. Some of the contracts are just not for parts of the ships but also for the infrastructure to support construction including transport of the sections by river to the main assembly point in Rosyth. The two Queen Elizabeth class ships will form the core of the Royal Navy for a good deal of the Twenty-First Century and will operate the F-35 Joint Strike Fighters being developed by Lockheed Martin.
Filed under: BAE Systems, Business Line, Companies, Contract Awards, Countries, Department of Defense, England, Events, Military Aviation, production program, Scotland, Services, VT Group
It is true that the United States defense budget does dominate the world’s spending on arms and equipment but the U.K. has always had large spending plans as well. Now that the U.K. government of Gordon Brown is facing massive deficits due to social spending and attempts at stimulating their own economy since the global recession began twelve months or so ago defence spending may get a little tight. There has already been discussion of canceling some large programs as well as cutting back on general spending. Like in the U.S. ending these kind of programs will lead to more job losses on top of those already gone in the civilian economy.
That is why stories like this one about the U.S. military buying BAE Systems artillery pieces that will be made in the U.K. will become more common. When you are relying on foriegn sales to keep up jobs for six months at a time it is not a good sign. There are bigger programs at risk for the U.K. such as the Eurofighter or A400M transports. The government is scrambling to maintain the new aircraft carrier contract as the jobs at Scottish shipyards are key to that part of the nation’s economy.
There is no doubt that the U.S. will also see a fall in defense spending as the pressures of debt, health care reform and other priorities will limit the money available from the Obama Administration’s budget.
Filed under: BAE Systems, Business Line, Contract Awards, England, General Dynamics, production program, Restructuring, Scotland, VT Group
As discussed recently the British government did go ahead and delay the two new aircraft carriers two years. Rueters reports thatthe pressures on the budget due to current operations and the world’s financial crisis led to this cost saving measure as well as the other two mentioned. The new vehicle to be made by General Dynamics was postponed. The British and the company had been negotiating over the cost of procuring the technical data rights to the vehicle and failed to reach a satisfactory agreement. The number of Lynx helicopters will also be reduced by eight. The delay in the ships is not supposed to have an affect on VT or BAE‘s contracts. More fallout to come I am sure.
Filed under: Agusta Westland, BAE Systems, Contract Awards, development program, England, General Dynamics, Military Aviation, production program, Scotland, VT Group
Faced with the costs of operations in Afghanistan and Iraq as well as the world’s economic crisis the UK government plans cuts to defense spending. Bloomberg.com: Europe reports that the Conservative opposition believes that the new aircraft carriers will be delayed and there will be cuts to a new vehicle and Lynx helicopter upgrades. The two large ships were due to begin construction in the near future as the contract had already been awarded to VT and BAE. The new armored vehicle is under development by General Dynamics and less then the currently planned 80 Lynx aircraft will be upgraded. The delay in the aircraft carriers would be a blow to Scotland as that part of the UK is relying on them for a significant number of jobs in the near future.
Filed under: Contract Awards, England, production program, Scotland, VT Group
The British Ministry of Defense signed the contract with the VT Group to build the two new aircraft carriers for the Royal Navy. See an article here. Previous reports had the Scottish government worried that Britain might renege on the deal due to differences with the emerging nationalistic mood in Scotland. See a post here. The total contract value is about $7.5 B with as always with these kind of programs the chance to go higher.
Filed under: Contract Awards, production program, VT Group
Worried about the effect on their workforce, Scottish MPs criticized the English government for not moving fast enough to award the new CV construction contract. For more see the BBC here. The two carriers will be built primarily in Scottish shipyards and will cost over 4 billion Pounds. Scotland is worried that with a possible change in the future constitutional relationship between the two countries may make the British government turn to English yards for the work. The Scottish defence industry is heavily dependent on English orders, not having had much luck securing foreign work. More to come on this, I am sure.
Filed under: England, Lockheed Martin, Military Aviation, training, VT Group
Bump – Further details on the contract the UK signed with Ascent, the joint venture of Lockheed and VT, to conduct aviation training have come out. See this article for some of the new details. It is a 25 year contract with the contractor that will be implemented incrementally as the current training program completes.
According to this short report, the UK is ready to transition all of its pilot training to a private contractor. This is for the Royal Navy, Royal Air Force and Army rotary wing pilots. If this is true it represents a major change in how training has been done in the past. One would have to assume that there are major cost savings in this transition away from maintaining their own aircraft and training staff. Beyond saying that Lockheed Martina and VT will carry out the contract no details were given as to how it would be done.
Filed under: Department of Defense, England, Federal Budget Process, VT Group
The US DoD has had a habit over the last five years to raid the investment accounts to fund current operations. This means they take RDT&E and procurement funding and convert it to Operations & Maintenance for war efforts. This is not always a good practice as it can play havoc with development and production programs. Part of the problem is that the Congress does not always budget well funding these types of programs and not putting enough into O&M. Now it seems the UK has the same problem according to this article. The UK MOD has proposed taking funding from programs to meet the demands of current operations and fund the two new carriers the British are about to start building. In the long run this is not a good practice as you create bills that have to be met in the out years, or end up canceling programs.
Filed under: BAE Systems, England, Restructuring, VT Group
This analysis in The Guardian says that BAE and the VT Group will lose billions in orders from the British government if planned cuts to the defence budget go through. Because some of the contracts for hardware have cancellation clauses the government may be force to buy the systems and then sell them to other nations. This is all part of an attempt to reduce public spending.