Babcock agrees sale of its US defence business
VT Services Inc is an engineering support and facilities management business. The business was acquired as part of Babcock’s acquisition of VT Group plc, which was completed in July 2010.
Following the acquisition, a strategic review of the combined Group was undertaken and in July 2011 Babcock announced that the acquired US defence operations did not meet its strategic objectives.
For the 2011/12 full year, VT Services Inc reported underlying revenue of $324.1 million (£202.1 million) and operating profit of $23.4 million (£14.7 million), which included $4 million (£2.5 million) of provisions for deferred consideration on previous acquisitions written back. The value of the gross assets of the business at 31 March 2012 was $164.6 million (£103.0 million) after impairment of goodwill of $93.5 million (£58.5 million).
The net proceeds of the disposal will be used to reduce the Group’s total net debt position.
Conditions of the disposal
The disposal will be subject to the satisfaction of certain anti-trust and regulatory conditions including:
- the waiting periods under the United States Hart Scott-Rodino Antitrust Improvements Act of 1976, and the regulations made thereunder in respect of the disposal having expired or been terminated
- confirmation from the US Defence Security Service of the termination of the Proxy Agreement which regulated Babcock’s ownership of VT Services Inc.
The disposal is expected to complete by the end of June 2012. The VT Services Inc operations and impairment charge will be treated as discontinued at 31 March 2012.
Commenting on the disposal, Peter Rogers (above), Chief Executive, Babcock, said: "As previously announced, VT’s US defence operations do not meet our strategic objectives and this transaction secures their disposal. We would like to thank the management team for their on going support throughout this process and wish our former employees the best for the future."
