New Acquisitions & DM55 Million Contract Wins

Babcock International Group PLC
31 January 2000



          BABCOCK ANNOUNCES ACQUISITIONS, ALONG WITH
                      DM55M CONTRACT WINS
                               

The Engineering Services Division of Babcock International
Group, the international engineering services group, has
acquired Tyneside based Armstrong Technology to help
complement its business in Rosyth. The business is one of the
UK's leading naval architecture and marine engineering design
consultants.

Babcock also announced the acquisition of a patented Radio
Frequency (RF) veneer drying technology from Production
Machinery Inc. (PMI) located in Oregon, USA, by BMH AKI
Dryers, one of the world's leading companies in drying
technology.  The two acquisitions, which total approx. £1.7m,
come hot on the heels of major contract wins through its BMH
Division, a world leader in the field of material processing
technologies and engineered systems.  The orders, valued at
DM55m, were won by BMH Americas (USA) and BMH Marine (Sweden).
They include a major gypsum technology plant for Lafarge, USA,
a port terminal project in France and a shipunloader in
Australia.

ARMSTRONG TECHNOLOGY
Armstrong  Technology, which is one of the UK's leading  naval
architecture  and  marine engineering design consultants,  was
created  in 1994 from the original design team at Swan  Hunter
Shipbuilders. Armstrong has developed significantly to  secure
a  substantial  client  base throughout the  marine  industry.
Armstrong will continue to be based at Newcastle at the Centre
for Advanced Industry on Tyneside.

Utilising the considerable experience of its 34 employees, the
company  provides diverse and innovative technical support  to
the   defence,   marine  and  offshore  sectors.   Armstrong's
capabilities,   combined  with  the  naval,  engineering   and
consultancy   business  of  the  Rosyth  Dockyard,   generates
excellent synergies and unrivalled marine technology expertise
in the UK.

With  Rosyth's  demonstrable  activity  in  nuclear  services,
submarine  and  surface warship technology,  this  acquisition
will both benefit a wide range of external clients and enhance
the  development of Rosyth into a broad based Support Services
business.

Murray  Easton,  Managing Director of BES, commenting  on  the
acquisition,  said that 'Armstrong would provide  a  range  of
experience   in  naval,  merchant  and  offshore  design   and
engineering  which  will  complement  the  Rosyth  engineering
services   in  a  unique  way,  thereby  creating   tremendous
development  opportunities. It will also provide a  technology
resource to facilitate Rosyth's development and offer  support
services to the offshore and merchant fleets alongside that of
naval, in both UK and overseas'.


RADIO FREQUENCY VENEER DRYING TECHNOLOGY

The drying technology is a new and innovative approach to
drying high value veneers used in door and trim facings, as
well as facing for cabinetry and similar engineered panel
based veneer laminates.

This patented technology, which combines modern RF technology
with a conveying dryer, will enhance BMH AKI's presence in the
wood veneers drying equipment market.  Customers will see
smaller capital expense compared to other technologies
performing the same production level.  By offering the new RF
drying system, BMH AKI will be able to enter the high value
veneers markets in both softwood and hardwood with a drying
method that is proven to produce quality veneers with little
or no product loss.

Joseph Potter, Managing Director of BMH AKI commented that,
'the addition of RF drying technology enhances our existing
panel drying expertise and strengthens our market position in
the wood veneer market'.
                               
Enquiries
Ginny Pulbrook or Oskar Yasar
Citigate Dewe Rogerson - 0171 638 9571