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BAE Systems

2007 Schools Wikipedia Selection. Related subjects: Companies

   BAE Systems plc
         Type       Public ( LSE: BA., OTCBB: BAESY)
       Founded      30 November 1999
     Headquarters   Farnborough, Hampshire, UK
      Key people    Dick Olver, Chairman
                    Mike Turner, CEO
       Industry     Aerospace and defence
       Products     Civil and military aerospace
                    Defence electronics
                    Naval vessels
                    Munitions
                    Land warfare systems
       Revenue      GB£15,411 million (2005)
   Operating income GB£1,182 million
      Net income    GB£583 million
      Employees     100,100
     Subsidiaries   BAE Systems Inc.
       Website      www.baesystems.com

   BAE Systems plc is the world's fourth largest defence contractor and a
   commercial aerospace manufacturer. BAE is a British company based at
   Farnborough, which has extensive worldwide interests, particularly in
   North America through its subsidiary BAE Systems Inc. BAE was formed on
   30 November 1999 with the merger of British Aerospace (BAe) and Marconi
   Electronic Systems (MES), the defence arm of The General Electric
   Company (GEC).

   BAE is the successor to many iconic aircraft and defence electronics
   companies, including The Marconi Company, the first commercial company
   devoted to the development and use of radio; A.V. Roe and Company, one
   of the world's first aircraft companies; and Supermarine, the
   manufacturer of the renowned Supermarine Spitfire. BAE has increasingly
   disengaged from its businesses in continental Europe in favour of
   investing in the United States. Since its formation it has sold its
   share of or dissolved the companies Astrium, AMS, Atlas Elektronik and
   most significantly its 20% share of Airbus SAS.

   BAE Systems is involved in several major defence projects, for example
   the F-35 Lightning II, the Eurofighter Typhoon and the Royal Navy
   future carriers. BAE has been the subject of criticism, both general
   opposition to the arms trade and also specific allegations of unethical
   and corrupt practices, including the Al Yamamah contracts with Saudi
   Arabia that have earned BAE and its predecessor GB£43 billion in twenty
   years.

History

   The merger of British Aerospace and Marconi Electronic Systems was
   announced on 19 January 1999. MES was acquired by British Aerospace for
   GB£7.7 billion.

Heritage

   Evolution of UK aviation, 1955 to BAE Systems formation in 1999
   (includes naval acquisitions)
   Enlarge
   Evolution of UK aviation, 1955 to BAE Systems formation in 1999
   (includes naval acquisitions)
   Evolution of the land systems division of BAE Systems, 1970s to Land &
   Armaments formation
   Enlarge
   Evolution of the land systems division of BAE Systems, 1970s to Land &
   Armaments formation
   The evolution of the British shipbuilding industry, including BAE
   Systems Naval Ships and BAE Systems Submarines
   Enlarge
   The evolution of the British shipbuilding industry, including BAE
   Systems Naval Ships and BAE Systems Submarines

   As a result of the British Aerospace-MES merger, BAE Systems is the
   successor to many of the most famous British aircraft, defence
   electronics and warship manufacturers.

   Marconi Electronic Systems had a heritage of almost 100 years.
   Following GEC's acquisition of Marconi in 1968 the Marconi brand was
   used for its defence businesses, e.g., Marconi Space & Defence Systems
   (MSDS) and Marconi Underwater Systems Ltd (MUSL). GEC's history of
   military products dates back to World War I with its contribution to
   the war effort then including radios and bulbs. World War II
   consolidated this position, as the company was involved in important
   technological advances, most notably radar. Between 1945 and the
   British Aerospace merger in 1999, the company became one of the world's
   most important defence contractors. GEC's major defence related
   acquisitions included Associated Electrical Industries in 1967, English
   Electric (including its Marconi subsidiary) in 1968, Yarrow
   Shipbuilders Limited in 1985, parts of Ferranti's defence business in
   1990, Vickers Shipbuilding and Engineering in 1995 and Kværner Govan in
   1999. In June 1998, MES acquired Tracor, a major American defence
   contractor, for US$1.4 billion.

   British Aerospace was the result of massive consolidation of UK
   aircraft manufacturers since World War II. British Aerospace was formed
   on 29 April 1977 by the nationalisation and merger of The British
   Aircraft Corporation, the Hawker Siddeley Group and Scottish Aviation.
   Both BAC and Hawker Siddeley were themselves the result of various
   mergers and acquisitions; BAC incorporated English Electric Aviation
   Ltd, Vickers-Armstrong (Aircraft), the Bristol Aeroplane Company and
   Hunting Aircraft, while Hawker Siddeley was formed by Hawker Aircraft's
   purchase of aviation businesses including Gloster Aircraft, Armstrong
   Whitworth Aircraft, A V Roe and later merger with de Havilland in 1959.
   The acquisition of Folland and Blackburn Aircraft followed, and in 1960
   this group was consolidated as the Hawker Siddeley Group.

Formation

   It was widely anticipated that British Aerospace would merge with
   Germany’s DASA to form a pan-European aerospace giant. A merger deal
   was negotiated between Richard Evans and DASA CEO Jürgen Schrempp.
   However when it became clear that GEC was selling its defence
   electronics business Marconi Electronic Systems, Evans put the DASA
   merger on hold in favour of purchasing Marconi. Evans stated that in
   2004 that his fear was that an American defence contractor would
   acquire Marconi and challenge both British Aeropspace and DASA.
   Schrempp was angered by Evans' actions and chose instead to merge DASA
   with Aerospatiale to create the European Aeronautic Defence and Space
   Company ( EADS). This group was joined by Spain’s CASA following an
   agreement in December 1999.

   The attraction of MES may well have been Tracor, which was the largest
   European defence purchase in the United States at that point. The
   creation of a UK company, compared with what would have been a
   British–German firm, made the possibility of penetrating the US defence
   market more likely. Since its creation the company has steadily
   increased its investment in and revenues from the US. At the same time,
   continental European companies have made limited moves into that
   market. Major European companies such as Thales and EADS are unlikely
   to ever be awarded, for example, a position relative to BAE Systems'
   involvement in the F-35 Joint Strike Fighter programme.

   In the company's 2003 Annual Report, Sir Richard Evans sums up BAE
   Systems' strategy since the Marconi merger; "In recent years BAE
   Systems has undergone a radical transformation from a UK-based aircraft
   manufacturer to a broadly-based systems business. Through this
   transformation the company has achieved a more balanced portfolio and
   geographic spread."

   BAE Systems inherited the "special" shareholding that was established
   when British Aerospace was privatised. This special share, with a
   nominal value of GB£1, is held on behalf of the Secretary of State for
   Trade and Industry. This shareholding prevents amendments of certain
   parts of the company's Articles of Association without the permission
   of the Secretary of State. These Articles require that no foreign
   person or persons acting together may hold more than 15% of the
   company's shares or control the majority of the board; the CEO and the
   Chairman of BAE Systems must be British nationals.

Expansion and restructuring

   With almost total consolidation of the defence industry on the European
   continent, BAE Systems turned its attention to North America, for
   example acquiring Lockheed Martin Control Systems, (LMCS) which
   produces controls for the B-2 Spirit bomber, the C-17 Globemaster III
   strategic transport, the F/A-18 Hornet, the Boeing 757 and Boeing 767
   commercial jets. Another acquisiton was Lockheed Martin Aerospace
   Electronic Systems, completed in November 2000. BAE has long been the
   subject of press reports linking it to major North American defence
   contractors, including Boeing, Lockheed Martin and General Dynamics.
   The company's shipbuilding assets (and Airbus in the Boeing context)
   have been named as blocks to any merger. The appeal of a link with a
   North American company is strong as the US defence market is by far the
   largest in the world. BAE Systems faces considerably fewer hurdles in
   this sense than their European counterparts, as there is a high degree
   of integration between the US and UK defence establishments.

   In 2000 Matra Marconi Space, a joint BAE/ Matra company, was merged
   with the space division of DaimlerChrysler Aerospace AG to form
   Astrium. On 16 June 2003 BAE sold its 25% share to EADS, making EADS
   the sole shareholder. Astrium was renamed EADS Astrium.

   In November 2001, BAE announced the closure of the Avro Regional Jet (
   Avro RJ) production line at Woodford and the cancellation of the Avro
   RJX, an advanced series of the aircraft family. The final Avro RJ to be
   completed became the last all-British civil airliner. BAE continues to
   support operators of its products through BAE Systems Regional
   Aircraft. In December 2001 BAE's missile businesses were merged into
   MBDA, in which it acquired a 37.5% stake. This included its share of
   the joint ventures Matra BAe Dynamics and Alenia Marconi Systems
   (missile division only).

   In June 2002, BAE confirmed it was in takeover discussions with TRW, an
   American aerospace, automotive and defence business. This was prompted
   by Northrop Grumman's GB£4.1 billion (approx. US$6 billion c.2002)
   hostile bid for TRW in February 2002. A bidding war between BAE,
   Northrop and General Dynamics ended on 1 July 2002 when Northrop's
   increased bid of GB£5.1 billion was accepted. In December 2002, BAE
   issued a shock profit warning due to cost overruns of the Nimrod MR4
   maritime reconnaissance/attack aircraft and the Astute SSN projects.
   BAE Systems took a charge of GB£750 million against these projects.

   In May 2004, it was reported that BAE Systems was considering selling
   its shipbuilding division, the two Clyde shipyards and the
   Barrow-in-Furness yard. The company would only say that it was
   reviewing its operations. It was understood that General Dynamics would
   like to acquire the submarine building facilities at Barrow, while
   Vosper Thornycroft was said to be interested in the remaining yards. As
   of 2006 the more likely move for BAE Systems' shipbuilding operations
   is their merger with other British shipyards to form a "Newco"
   shipbuilding company.

   On 4 June 2004, BAE Systems outbid General Dynamics for Alvis Vickers,
   the UK's main manufacturer of munitions and armoured vehicles. What had
   seemed a certain win for the US company was stopped by BAE Systems'
   surprise move. On 7 March 2005 BAE Systems announced the
   GB£2.25 billion (approx. US$4.2 billion c.2005) acquisition of the USA
   defence company United Defense Industries (UDI). UDI, a major
   competitor to General Dynamics, is primarily a land systems
   manufacturer, boosting BAE Systems' involvement in this sector. UDI,
   now BAE Systems Land and Armaments, manufactures combat vehicles,
   artillery systems, naval guns, missile launchers and precision guided
   munitions.

   In December 2005, BAE announced the sale of its German naval systems
   subsidiary, Atlas Elektronik, to ThyssenKrupp and EADS. The sale was
   complicated by the requirement of the German government to approve any
   sale as acceptable. The Financial Times described the sale as "cut
   price" due to the fact that French company Thales bid €300 million, but
   was blocked from purchasing Atlas on national security grounds. On 31
   January 2006 BAE announced the sale of BAE Systems Aerostructures to
   Spirit AeroSystems, Inc. BAE said as early as 2002 that it wished to
   dispose of what it did not regard as a "core business".

Eurosystems

   In July 2003 BAE Systems and Finmeccanica announced their intention to
   set up three joint venture companies collectively to be known as
   Eurosystems. These companies would have pooled the avionics, C4ISR and
   communications businesses of the two companies. The difficulties of
   integrating the companies in this way lead to a re-evaluation of the
   proposal, BAE's 2004 Annual Report states that "recognising the
   complexity of the earlier proposed Eurosystems transaction with
   Finmeccanica we have moved to a simpler model." The main part of this
   deal was the dissoloution of AMS.

Airbus shareholding

   BAE Systems inherited British Aerospace's share of Airbus Industrie,
   which consisted of two factories at Broughton and Filton. These
   facilities manufactured wings for the Airbus family of aircraft. In
   2001 Airbus was incorporated as Airbus SAS, a joint stock company. In
   return for a 20% share in the new company BAE Systems transferred
   ownership of its Airbus plants (now known as Airbus UK) to the new
   company.

   BAE has long been the subject of press reports regarding the future of
   its 20% share of Airbus. The Economist's "The World in 2006" said BAE
   was "almost certain to sell" its Airbus share to EADS in 2006 to fund a
   major U.S. acquisition and named L-3 Communications as an "obvious
   candidate". Despite denials by the company the BBC reported on 2006-
   04-06 that BAE was indeed to sell its stake, then "conservatively
   valued" at GB£2.4 billion.

   Due to the slow pace of informal negotiations BAE exercised its put
   option which saw investment bank Rothschild appointed to give an
   independent valuation. Six days after this process began, Airbus
   annouced delays to the A380 which caused a 26% collapse in the EADS
   share price and hence in the value of Airbus SAS. On 2006- 07-02
   Rothschild valued BAE's share at GB£1.9 billion, well below BAE's,
   analysts' and even EADS' expectations. On 6 September 2006, BAE board
   announced it would recommend to shareholders to sell its share for
   GB£1.87 billion. On 4 October 2006, shareholders voted in favour of the
   sale, which was completed on 13 October.

Recent events

   With BAE's GB£2.5 billion purchase of United Defense in 2005 BAE added
   the M2/M3 Bradley family of armoured vehicles to its product line.
   Enlarge
   With BAE's GB£2.5 billion purchase of United Defense in 2005 BAE added
   the M2/M3 Bradley family of armoured vehicles to its product line.

   On March 23, 2006 BAE and VT Group announced to the stock exchange that
   they were considering a joint bid for Babcock International. On May 10,
   2006, BAE Systems abandoned the plan because "the economics of a deal
   do not create sufficient value for BAE Systems or the other parties".

   On March 16, 2006 the Financial Times reported the possible sale of
   BAE's 37.5% share of MBDA. The paper reported that EADS is keen to take
   full control of the joint venture by acquiring the BAE share and
   Finmeccanica's 25%.

   One of BAE's major aims, as highlighted in the 2005 Annual Report, was
   the granting of increased technology transfer between the UK and the
   US. The JSF programme became the focus of this effort, with British
   government ministers such as Lord Drayson, Minister for Defence
   Procurement, suggesting the UK would withdraw from the project without
   the transfer of technology that would allow the UK to operate and
   maintain F-35s independently. On May 27, 2006 President Bush and Prime
   Minister Tony Blair issued a joint statement which announced "Both
   governments agree that the UK will have the ability to successfully
   operate, upgrade, employ, and maintain the Joint Strike Fighter such
   that the UK retains operational sovereignty over the aircraft."

   On August 18, 2006 Saudi Arabia signed a contract for 72 Eurofighter
   Typhoons, to be delivered by BAE Systems. Reports suggests the contract
   is worth GB£6 billion to GB£10 billion to UK industry. On 10 September
   2006 BAE won a GB£2.5 billion contract for the upgrade of 80 RSAF
   Tornado IDSs.

   On September 6, 2006 BAE announced it was selling its 20% stake in
   Airbus to EADS, which already owned the remaining 80%, for
   GB£1.87 billion. On 4 October shareholders voted in favour and the sale
   was completed on 13 October 2006.

Products

   BAE Systems is a partner in the F-35 Lightning II programme
   Enlarge
   BAE Systems is a partner in the F-35 Lightning II programme

   BAE Systems either leads or has a major stake in some of the world's
   most high profile, high technology aerospace, land warfare and maritime
   projects. BAE Systems' interests in commercial aviation are vested in
   BAE Systems Regional Aircraft. BAE Systems Regional Aircraft no longer
   produces aircraft, however it continues to lease and support its
   products, the Avro RJ/BAE 146 family, BAe ATP, Jetstream and BAe 748.
   BAE plays important roles in military aircraft production. The
   company's Eurofighter Typhoon, Panavia Tornado and Harrier
   fighter-bombers are all front line aircraft of the Royal Air Force. BAE
   is a major partner in the F-35 Lightning II programme. Its Hawk
   advanced jet trainer aircraft has been widely exported.

   BAE Systems Land Systems manufactures the British Army's Challenger II,
   Warrior Tracked Armoured Vehicle, M777 howitzer, Panther Command and
   Liaison Vehicle and L85 Assault Rifle. BAE Systems Land and Armaments
   manufactures the M2/M3 Bradley fighting vehicle family, the United
   States Navy Advanced Gun System (AGS) and the M109 Paladin.

   Major naval projects include the Astute class submarines, the Type 45
   air defence destroyer and the future aircraft carrier.

Position in its markets

   BAE Systems is the predominant supplier to the UK Ministry of Defence
   (MOD), being the only company to receive more than GB£1 billion from
   the MOD in 2004/2005. Since its creation BAE Systems has had a
   difficult relationship with the MOD. This has been attributed to
   deficient project management by the company, but also in part to the
   deficiencies in the terms of "fixed price contracts". BAE CEO Mike
   Turner said in 2006 "We had entered into contracts under the old
   competition rules that frankly we shouldn’t have taken." These
   competition rules were introduced by Lord Levene during the 1980s to
   shift the burden of risk to the contractor and were in contrast to
   "cost plus contracts" where a contractor was paid for the value of its
   product plus an agreed profit. However BAE and its predecessors grew,
   particularly in the 1990s, to the point where not only were they
   leading suppliers to the MOD, but also more competitive
   internationally.

   In December 2005 the MOD published the Defence Industrial Strategy
   (DIS) which has been widely acknowledged to recognise BAE as the UK's
   "national champion". The DIS identifies key industrial capabilities
   which must be maintained within the UK through long-term government
   commitments to support research spending and procurement. Of these
   capabilities, several are dominated by BAE, including naval vessels and
   submarines, armoured fighting vehicles (over 95% of the UK’s AFVs are
   BAE products), fixed wing aircraft, general munitions (with the
   exception of certain "niche capabilities abroad") and Network Enabled
   Capability (defined as C4ISTAR in the DIS).

   After the publication of the DIS BAE Systems CEO Mike Turner said "If
   we didn't have the DIS and our profitability and the terms of trade had
   stayed as they were... then there had to be a question mark about our
   future in the U.K."

   BAE now sells more to the US Department of Defense (DOD) than the UK
   MOD and by 2006 had become the seventh largest supplier to the DOD. The
   company has been allowed to buy important defence contractors in the
   United States, however its status as a UK company requires that its US
   subsidiaries are governed by American executives under Special Security
   Arrangements.

Corporate governance

   As of February 2006 the members of the board of directors of BAE
   Systems were: Dick Olver (Chairman), Sue Birley, Phil Carroll, Ulrich
   Cartellieri, Chris Geoghegan, Michael Hartnall, Michael Lester, Peter
   Mason, Steve Mogford, Roberto Quarta, Mark Ronald, George Rose, Mike
   Turner ( CEO), and Peter Weinberg.

   After more than 30 years with the company and its predecessors, BAE
   Systems' longstanding Chairman Sir Richard Evans announced his
   successor in March 2004. Dick Olver, formerly the deputy
   chief-executive of BP, succeeded Evans on 1 July 2004. This appointment
   came at a significant time with stock market confidence still
   recovering from the shock profit warning of December 2002.

   Mike Turner replaced John Weston in 2002. Weston was forced out in what
   was a surprise move. It is understood that Turner, like Evans, has a
   poor working relationship with senior Ministry of Defence officials,
   (for example with former Defence Secretary Geoff Hoon). Significantly
   the first meeting between Olver and Hoon was said to have gone well, a
   MoD official commented "He is a man we can do business with. We think
   it is good to be taking a fresh look at things."

   Reports in 2005 suggested that relations between the Chairman (Olver)
   and CEO (Turner) were strained. In June 2005 Turner heightened investor
   concerns of boardroom tensions by criticising Olver's knowledge of the
   defence industry, "[he] has a low knowledge base and knows nothing
   about our industry". Turner did suggest however that Olver was on a
   learning curve, "He'll fully understand it [in 5 years]. This is a
   business that takes time to understand. It's not just business, it's
   political."

Financial information

     CAPTION: Table 1 BAE Systems five year results (source BAE Systems
                             Annual Report 2005)

   Year ended Turnover (GB£ million) Profit/(loss) before tax (GB£m) Net
                    profit (GB£m) Earnings per share (p)
                     31 Dec 2005^[i] 15,411 845 555 22.5
                      31 Dec 2004^[i] 13,222 730 3 17.4
                        31 Dec 2003 15,572 233 8 16.6
                  31 Dec 2002 12,145 (616) (686)^[ii] 17.3
                      31 Dec 2001 13,138 70 (128) 23.4

   [i]: IFRS. 2003, 2002 and 2001 data prepared using UK GAAP procedures.
   [ii]: Reflects GB£750 million charges for problems with Nimrod MRA4
   (GB£500 million) and Astute class submarine (GB£250 million)
   programmes.

   Of all the company's activities, the most profitable are the Al Yamamah
   contracts to supply and support the Royal Saudi Air Force. This deal
   contributes substantially to the company's profits; it was 42% in 2003.

Merger undertakings

   Various undertakings were given by BAE Systems to the Department of
   Trade and Industry which prevented a reference of the merger to the
   Monopolies and Mergers Commission.Ordinarily merger decisions are taken
   by the European Commission, however EC Merger Regulation Article 296
   allows member states to take any decisions relevant to national
   security. The EC granted its approval of the non-military aspects in
   June 1999.
    1. The MES shipyards and Marconi Avionics were to be kept as
       subsidiaries of the new company, with independent financial
       accounts. Further these subsidiaries must be available to all
       potential prime contractors (i.e. including external companies) on
       equal terms.
    2. BAE Systems must competitively tender sub-contracts, i.e. the new
       subsidiaries must not automatically receive sub-contracts.
    3. Due to the competition of British Aerospace and MES in various
       major defence projects, the company was ordered to set up various
       "firewalls" to prevent interaction between the former MES and BAe
       teams on those projects. An example of this was the initial stages
       of the Joint Strike Fighter programme where MES was involved in
       Boeing's X-32 project and BAe supported Lockheed Martin's X-35 bid.
    4. A compliance officer was appointed by BAE Systems to ensure the new
       company followed these requirements and procedures. The remit of
       this job was strictly set out, including the qualifications (length
       of time with the company etc), access to staff and information, and
       independence.

   In 2006 the Office of Fair Trading announced it had launched a review
   of the undertakings to determine whether "the undertakings are still
   appropriate or need to be varied or superseded, or whether BAE Systems
   can be released from them." This follows BAE questioning the "continued
   relevance of a number of the undertakings" given the changes in the
   defence industry since 1999.

Criticisms

   HMS Coventry was one of two frigates sold to Romania. The terms of the
   sale have been controversial.
   Enlarge
   HMS Coventry was one of two frigates sold to Romania. The terms of the
   sale have been controversial.

   Like many arms manufacturers, BAE has received criticism from various
   human rights and anti-arms trade organisations due to the human rights
   records of governments it has sold equipment to. These include
   Indonesia, Saudi Arabia and Zimbabwe. Groups such as Campaign Against
   Arms Trade have criticised the company for supplying arms to Israel,
   which they argue is guilty of human rights abuses. BAE's U.S.
   subsidiary makes several sub-systems for F-16s, 236 of which have been
   supplied to the Israel Defense Forces.

   BAE (and British Aerospace previously) has long been the subject of
   allegations of bribery in relation to its business in Saudi Arabia
   (through the Al Yamamah contracts). An earlier contract, the BAC sale
   of arms in the 1970s including Lightning fighters, involved
   "commission" payments of GB£100 million.The company has been accused of
   maintaining a GB£60 million Saudi slush fund and is the subject of an
   investigation by the Serious Fraud Office. The UK National Audit Office
   investigated the contracts and has so far not published its conclusions
   - the only NAO report ever to be withheld. In July 2006 The Guardian
   reported that the Comptroller and Auditor General (head of the NAO) had
   refused requests by the Ministry of Defence police and the Serious
   Fraud Office to see the report. In response to the reports the Ministry
   of Defence stated "The report remains sensitive. Disclosure would harm
   both international relations and the UK's commercial interests."

   In September 2005 The Guardian alleged that banking records showed that
   BAE paid GB£1 million to Augusto Pinochet, the former Chilean
   dictator.The Guardian has also reported that "clandestine arms deals"
   have been under investigation in Chile and the UK since 2003 and that
   British Aerospace and BAE made a number of payments to Pinochet
   advisers.

   BAE has been criticised for its role in disposing of surplus Royal Navy
   warships. HMS Sheffield was sold to the Chilean Navy in 2003 for
   GB£27 million, however the government's profit from the sale was GB£3
   million after contracts worth GB£24 million were placed with BAE for
   upgrade and refurbishment of the ship. BAE is alleged to have paid
   "secret offshore commissions" of over GB£7 million to secure the sale
   of HMS London and HMS Coventry to the Romanian Navy. BAE received a
   GB£116 million contract for the refurbishment of the ships.

   BAE Systems does not manufacture land mines. While it does not directly
   manufacture cluster munitions it received a contract for 26,000 155 mm
   L20 cluster artillery shells in November 2002 with manufacture
   subcontracted to Israel Military Industries. Armed Forces Minister Adam
   Ingram explained that BAE's involvement came from the fact that "BAE
   Systems [was] able to negotiate favourable rates for the shell."

Joint ventures etc.

   A BAE–assembled Eurofighter Typhoon T1. BAE is a partner in Eurofighter
   Jagdflugzeug GmbH, the multinational company that coordinates the
   design, production and upgrade of the aircraft.
   Enlarge
   A BAE–assembled Eurofighter Typhoon T1. BAE is a partner in Eurofighter
   Jagdflugzeug GmbH, the multinational company that coordinates the
   design, production and upgrade of the aircraft.

   BAE's shares in Panavia Aircraft GmbH (37.5%) and Eurofighter
   Jagdflugzeug GmbH (33%) represent its involvement in the Panavia
   Tornado and Eurofighter Typhoon projects. BAE is involved in production
   of the export version of the Saab Gripen and owns 50% of Gripen
   International KB, the company responsible for marketing of the
   aircraft. BAE inherited a 35% share in Saab AB from British Aerospace.
   This was reduced to 20.5% in January 2005.

   In 2001 BAE's missile businesses were merged into MBDA in 2001 giving
   BAE a 37.5% share. Other shareholdings include 25% of SELEX Sensors and
   Airborne Systems, 50% of Flagship Training Limited and 50% of Fleet
   Support Limited (a joint venture with VT Group plc).

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