BAE win huge order in wake of failed merger

BAE Systems was said to have reached a ‘milestone’ this week as they bounce back after a failed merger with the EADS. This is due to the fact that they won the prestigious £1.2b submarine contract from the Ministry of Defence.

As part of the contract, the BAE will be responsible for designing and building the HMS Audacious; which is the fourth out of seven submarines that are powered by nuclear energy. Partners in the contract include Babcock and Rolls-Royce. In addition, the MOD also stated that another £1.5b has been pledged to the creation of the last three subs and BAE will receive a large chunk of this money.

The new contract will help secure about three thousand jobs in Cumbria and managing director John Hudson from the BAE Submarine division stated that this is a very important milestone for the company and will offer stability to the rest of the programme.

BAE needed the boost in order to get rid of the bad vibes left over when the EAD merger valued at £28b failed. The merger fell apart in October of this year after the German government vetoed the merger causing shares in BAE to drop down to as low as 300p which was almost a 64p drop in just two months.

However, a series of new government contracts has helped BAE climb back onto their feet. AT the end of October BAE won a £315m contract to help replace the Vanguard subs of the Royal Navy and then in November it signed a three year research contract valued to be worth about £32m. Philip Hammond, the Defence Secretary, stated that the new deal shows how committed the government is to building the Royal Navy.