LONDON, Jan. 31 (UPI) -- British company BAE Systems says buying Tenix Defence is an important step in its global expansion strategy.
"The acquisition of Tenix Defence is a significant step in the implementation of BAE Systems' strategy to develop as the premier global defense and aerospace company," BAE Systems said in a statement Jan. 18.
"Australia is one of BAE Systems' six home markets and has attractive prospects arising from the Australian Government's commitment to increase defense spending by 3 percent per annum in real terms until 2015-16 and its preference to maintain a strong national defense capability," the company said.
"For the twelve month period ended 30 June 2007, Tenix Defence generated pro forma EBITDA of A$56 million --a round $50 million on sales of A$699 million -- around $600 million," BAE Systems said.
"The proposed acquisition is expected to deliver a return in excess of BAE Systems' cost of capital in the first full year following the proposed acquisition," the company said.
Mike Turner, chief executive of BAE Systems, said: "I am delighted that we have agreed to acquire Tenix Defence, which will transform our business in Australia."
Jim McDowell, chief executive of BAE Systems Australia, said: "This transaction significantly enhances the depth and breadth of our capabilities in Australia and adds a major naval business to our portfolio and significantly increases our land capability. The combination of the two companies will enable us better to equip and support the Australian Defense Force for many years to come."
"The purchase consideration is subject to customary post completion adjustments. Completion is conditional upon certain regulatory clearances, other third party consents and final verification of certain matters and is expected in the first half of 2008," BAE Systems said.
BAE Systems said it had been "advised in this transaction by Lehman Brothers."