UPDATE 1-BAE picks former General Dynamics exec to head U.S. unit

Tuesday, 7 Jan 2014 | 11:21 AM ET

LONDON, Jan 7 (Reuters) - British defense contractor BAE Systems Plc appointed Jerry DeMuro to head its U.S. business, pinning its hopes on the former General Dynamics executive to steer it through U.S. military cuts that are set to bite over the next decade.

DeMuro, who will begin as president and chief executive of the U.S. unit on Feb. 1, will replace Linda Hudson who announced her retirement in August last year. BAE's U.S. business accounts for about 40 percent of its total revenues.

Defense suppliers to the U.S. face a challenging time over the next decade, given $487 billion in planned cuts to the U.S. military budget, and additional sizeable reductions mandated by Congress.

DeMuro follows Hudson to BAE from U.S. weapons manufacturer General Dynamics. He was previously executive vice president and corporate vice president at General Dynamics's $11 billion information systems and technology group. DeMuro was passed over for the top position at General Dynamics in late 2012, a job now held by Phebe Novakovic.

"His experience will be of immense benefit as the company strives to maintain its strong performance in the United States core defense market and increase its focus on new international and commercial opportunities," BAE's Chief Executive Ian King said.

At General Dynamics, DeMuro managed the acquisition and integration of 22 companies, as well as 8 divestitures, with a cumulative value of $5 billion, according to a fact sheet compiled by BAE.

In its global business, BAE faced investor worries over its growth prospects last year after the United Arab Emirates pulled out of talks to buy 60 Eurofighter Typhoon combat jets in a $9.8 billion deal.

Shares in BAE were down 1 percent in afternoon trading Tuesday on the London Stock Exchange, lagging Britain's blue chip index which was up 0.5 percent.

Hudson, the first woman to head a major U.S. defense operation, had been at BAE since 2007. She will retire from the company's board on Feb. 1.

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