UK's BAE to Buy Australia's Tenix for $680 Million

U.K.'s BAE Systems said on Friday it had agreed to buy Australian defense contractor Tenix defense for up to A$775 million ($680 million) in cash, to boost its operations in the country.

The acquisition of privately-owned Tenix defense will more than double BAE Systems' presence in Australia, BAE said in a statement.

"This transaction significantly enhances the depth and breadth of our capabilities in Australia, adds a major naval business to our portfolio and significantly increases our land capability," Jim McDowell, chief executive of BAE Systems Australia, said in a statement.

"The combination of the two companies will enable us better to equip and support the Australian defense Force for many years to come," he added.

BAE Systems Australia has more than 5,500 staff and annual sales of over A$1.2 billion.

Tenix defense had proforma earnings before interest, tax, depreciation and amortisation (EBITDA) of A$56 million and sales of A$699 million, for the fiscal year ended June 2007.

Lehman Brothers advised BAE Systems on the transaction which is subject to regulator clearances.

The acquisition is expected to deliver a return in excess of BAE Systems' cost of capital in the first full year following the deal, BAE said.

Private equity firm Carlyle Group, and Australia's Leighton Holdings had also been seen as possible contenders to acquire Tenix.

Tenix had appointed UBS to advise on a sale after the owners, the Salteri family, decided to consider an auction following a strategic review of the business.

Tenix Defence comprises four wholly owned businesses and two joint venture interests.