Acquisition

BAE Systems PLC
14 July 2000



BAE SYSTEMS agrees acquisition of AES electronic warfare business


BAE SYSTEMS has agreed the acquisition of the Lockheed Martin's Aerospace
Electronic Systems businesses (AES), including the Sanders electronic warfare
business, for $1.67bn.  AES will be acquired by BAE SYSTEMS' wholly owned US
subsidiary BAE SYSTEMS North America.
 
The acquisition, which will be funded from existing facilities, will
complement BAE SYSTEMS established airborne systems business and will
substantially expand the company's presence in the US market. 

The AES businesses had net assets of approximately $565m as at 31 Dec 1999. 
In the year ended 31 Dec 1999 the business produced profit before interest and
tax of $118m on sales of $1,178m. The acquisition is conditional on receiving
the necessary regulatory clearances. The acquisition is expected to be
earnings neutral in the first full year of operation with enhancement in
subsequent years.

AES has strong market positions in the high technology field of electronic
warfare with good positions on many key US defence programmes.  AES is a
significant contributor to both new airborne platforms and upgrades of
existing, in-service, platforms.  AES has substantial Avionics involvement in
the next generation of US fighter aircraft programmes currently under
development, including the F-22, F/A-18E/F and the Joint Strike Fighter (JSF).
 In addition to growth from programmes moving from development to production,
upgrades of legacy systems are expected to become an area with substantial
growth over the coming years.
 
AES employs 5,300 people in the USA at locations in Nashua, Merrimack and
Hudson in New Hampshire; Lexington, Massachusetts; Pomona, California and
Yonkers, New York.

John Weston, Chief Executive BAE SYSTEMS said:- 'This acquisition strengthens
BAE SYSTEMS as a major player in the global defence market.   The AES
businesses will complement BAE SYSTEMS' established positions in the systems,
defence and aerospace markets world-wide.  

BAE SYSTEMS is a global systems, defence and aerospace business with head
office in Farnborough in the UK.  The company has significant operations in
the United States and, with this acquisition and on completion of the
acquisition of the Lockheed Martin Control Systems business announced in April
this year, will employ over 24,000 people in North America.


BAE SYSTEMS activities in North America include information systems such as
mission management and strategic planning systems, communications and data
links; combat systems; avionics, navigation systems and flight controls for
civil and military applications; fuel and vehicle management systems;
aerostructures and assemblies, and simulation and training systems businesses.



Issued by 

BAE SYSTEMS plc
Warwick House 
Farnborough