Challenger tank deal waved through

THE fate of UK tank maker Alvis appeared to be sealed today after the government said it will not refer its proposed acquisition by US defence giant General Dynamics to the Competition Commission.

Competition minister Gerry Sutcliffe said, however, that the two sides would have to provide assurances about protecting Alvis‘s classified technology and information.

There was also reassurance on the jobs front. General Dynamics will have to retain a UK manufacturing presence at Alvis, which makes Challenger tanks and armoured personnel carriers.

The decision not to refer the takeover to the Competition Commission was predicted by This Is Money last month. It means that ownership of yet another British defence company is to pass into foreign hands – the UK‘s only helicopter manufacturer, Westland, was sold last month to Italian defence group Agusta.

The government‘s decision today is in line with the view of the Office of Fair Trading on jurisdiction but heeds Ministry of Defence advice as to how best to remedy the public security concerns identified.

Sutcliffe said he will also seek guarantees about the maintenance of UK manufacturing, thereby providing some protection for Alvis‘s UK workforce.

The 280p a share recommended cash offer, worth £309m, was announced two months ago. So far 21% of shareholder have accepted but most City watchers expect the rest to do so in the next few weeks.

BAE Systems, the largest single shareholder in Alvis, has already ruled out making a counterbid for Alvis after General Dynamics secured the approval of the Alvis board.

French defence group Thales and Germany's Rheinmetall were rumoured to be considering higher offers for the company, but none has materialised.