Defense spending in the private sector

Scott Jagow Feb 23, 2007


SCOTT JAGOW: This week Britain said it was pulling some troops of out Iraq. But that doesn’t mean British defense companies will stop making money off the war. Today’s Times of London says BAE Systems has a long list of American companies it might wanna buy this year. David Robertson is the Times business correspondent. David, why’s BAE going on a buying spree?

DAVID ROBERTSON: It’s really to do with the U.S. Department of Defense’s budget, which this year is ballpark $650 billion. It’s just simply such a vast sum of money that every defense company in the world wants a slice of it.

JAGOW: Well you say a long list of potential takeover targets, do we have any names?

ROBERTSON: Not yet. And I think we can pretty much rule out the primes as they’re called, the big players. My understanding is that neither the U.S. DoD or the U.K.’s Ministry of Defense really wants to see the likes of Boeing and BAE or Lockheed Martin and BAE get together. What I think we are going to see is consolidation in the second tier. And it’s going both ways. Lockheed Martin is looking at acquisitions in the U.K. market.

JAGOW: OK David thanks so much.

ROBERTSON: Thank you very much.

JAGOW: By the way, BAE said yesterday its profits tripled last year.

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