BAE Systems puts US business up for sale

BAE Systems is considering selling part of its American business after receiving a number of enquiries from potential buyers. News that the US-based manpower and services businesses of the defence giant's US Intelligence and Security (I&S) division is up for sale ended a recent sell-off and had the shares are up as much as 4% on Friday.

External advisors have been called in to "support a strategic assessment" of the businesses to be sold, which includes the technical, mission and IT support services operations that mainly serve the US government.

Problems at BAE's I&S arm were flagged in full-year results last month, blamed on US budget pressures and fewer overseas operations. Progress was made in geospatial intelligence, so BAE is holding onto this. It also wants to keep its hands on the Applied Intelligence cyber security business.

The US Intelligence & Security sector generated 79% of the £1.1 billion of sales at BAE's Cyber & Intelligence division in 2014. Underlying operating profit at the unit rose to £123 million. Bosses predict "marginally lower" sales in Intelligence & Security this year.

Since joining from General Dynamics in February last year, the head of BAE's US unit Jerry DeMuro has made big changes, reshaping the company to save cash. The US division has been streamlined into three operating sectors and the group's electronic systems and land & armaments businesses saw improvements over the year. I&S businesses have struggled to serve the US government security market, however, despite reducing costs in line with government budgets.

BAE's shares jumped 4% on the news to 524p, over 30% higher than this time last year.

There is no certainty any deal will go through, but more details will be given when appropriate, the company said.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.