Italians in £1bn deal with BAE

EIGHT thousand British aerospace workers are to be transferred to Italian defence group Finmeccanica after BAE Systems signed a deal that will see it exit the avionics business in Europe.

The £1bn deal comes just months after Finmeccanica bought British defence business Westland helicopters.

Defence equipment group BAE today said that it had agreed to sell its British-based avionics business providing airborne radar and electronic warfare expertise to the Italian group, which already has substantial avionics operations in Galileo.

Finmeccanica will pay BAE £379m for its operations and BAE will retain a 25% stake in what initially will be a joint venture called Euro-Systems.

But it is likely to sell that stake to Finmeccanica within two years. The pair have signed an option agreement valuing it at £269m and EuroSystems at £1.08bn.

The deal and further transactions, including a dissolution of the AMS networked solutions joint venture, will give BAE net cash of £364m, rising to £633m when it exercises its EuroSystems option.

The 8,000 workers are at plants in Rochester, Basildon, Luton and Edinburgh. The news comes just a day after BAE announced 1,400 redundancies.