Yahoo News MoD to set sail with Babcock on £340m Navy warships deal
The FTSE-100 company Babcock International will this week set sail towards a prestigious £340m deal providing support services to the Royal Navy's fleet of warships.
Sky News has learnt that Babcock will announce to the London Stock Exchange (Other OTC: LDNXF - news) on Monday that it has been selected as the Ministry of Defence's (MoD) preferred bidder for the contract after seeing off stiff competition from rivals.
Clinching the Marine Systems Support Partner deal will deliver a major boost to the British company and its partners.
The announcement will come just days after shares in Babcock were hit after the company said it would end its nuclear reactor clean-up contract prematurely because of a botched Government procurement process.
That development reduced the value of Babcock's pipeline by roughly £800m - but just under half that sum will be recouped from the new warship deal to be announced on Monday.
One defence industry source said this weekend that the latest contract win for Babcock would rank among its most important MoD partnerships, providing ongoing support to a large fleet of vessels over a seven-year period.
The ships included in the arrangement will include the Royal Navy's latest Type 45 Destroyers, which have been plagued by a range of technical problems.
All six of the Type 45 fleet, which includes HMS Daring and HMS Dragon, are due to have their engines replaced.
Babcock, which will report its full-year results towards the end of May, is expected to sign a formal contract with the MoD in about six weeks, an insider said.
The company said last week that the termination of its Nuclear Decommissioning Authority agreement would have no negative financial impact over the next three years.
It is likely to give a further update on its new pipeline of contracts alongside its results.
Babcock and the MoD both declined to comment on Sunday.
