BAE Systems sells control of its vehicles to Rheinmetall

British defense giant BAE Systems sold its German rival Rheinmetall a majority stake in its UK tank and combat vehicle division for £ 28.6 million.

The new joint venture gives Rheinmetall a 55% stake, with BAE owning the rest, and will be based at the company's British plant in Telford, Shropshire.

Called Rheinmetall BAE Land Systems, the company will produce the new infantry vehicles of the British Army.

The BAE UK Land Unit is modernizing and maintaining the Challenger 2 tank.

About 400 people work in the main Telford plant and at sites in Washington, Filton and Bovington. The new venture will not include Land UK's interests in ammunition and technology.

BAE said the combination of Rheinmetall's technology and military vehicle products, as well as its capabilities, would create a European market leader in the military vehicle sector, which could create new jobs in the UK.

Jennifer Osbaldestin, Managing Director of Land UK, said: "By joining forces with Rheinmetall in the UK, we are renewing our business in the vehicle sector and enabling us to provide products, services and technologies that help land forces to excel in their essential roles. "

The British operation, which also manages the Warrior armored vehicle, generates revenues of around £ 60 million a year.

Ben Hudson, Global Head of Vehicle Systems Division at Rheinmetall, said, "The combined capabilities of our two major companies will provide our customers with a full portfolio of military vehicles and related technologies, today and at the same time. 39; future.

"We are proud to invest in the UK and plan to significantly expand Telford's existing operations and manufacturing facilities over the next few years."

Rheinmetall is already leading a consortium, called Artec, which will build the new Boxer armored vehicle for the British Army.

The UK government said 60% of the value of the program was to be delivered to the UK and BAE said the new joint venture gives it a central role in the contract.