BAE Systems to create military joint venture with Rheinmetall

BAE Systems is to sell a majority stake in its UK-based combat vehicles unit to German rival Rheinmetall for £28.6 million in order to ensure the long-term sustainability of its tank business.

The move is part of a wider deal with Rheinmetall to create a joint venture to design, build and support military vehicles that will sustain more than 400 jobs in the UK.

Rheinmetall will acquire a 55% stake in the Telford-based joint venture and Britain’s largest defence contractor will retain the rest.

The new joint venture, which will be known as Rheinmetall BAE Systems Land (RBSL), will help BAE Systems deliver the British Army’s new mechanised infantry vehicle and other combat automobile programmes.

RBSL will form part of Rheinmetall’s vehicle systems division and contribute to the company’s global military contracts.

BAE Systems said the combination of Rheinmetall’s military vehicles technology and products, together with BAE’s capabilities, will create a European market leader in the military vehicle sector with the potential to create hundreds of new jobs in the UK.

The joint venture is subject to regulatory approvals and is expected to complete in the first half of this year.

BAE Systems’s UK combat vehicles manufacturing and support business helps the Ministry of Defence and British Army maintain and upgrade military vehicles.

It generates revenue of about £60 million a year and employs about 400 people largely based in Telford, as well as at sites in Washington, Filton and Bovington.

Ben Hudson, global head of Rheinmetall’s vehicle systems division, said: “The combined capabilities of our two great companies will offer our customers a comprehensive portfolio of military vehicles and associated technologies both now and into the future.

“We are proud to invest in the UK and expect to substantially grow the current business and the Telford manufacturing facility over the coming years.”

Jennifer Osbaldestin, managing director of BAE Systems Land UK business, added: “We are committed to evolving our combat vehicles business so that we better serve our customers’ future interests.

“Joining forces with Rheinmetall in the UK provides renewed purpose for our vehicles business and allows us to deliver products, services and technology that help land forces excel in their vital roles.”