By Aileen Robertson

DEFENCE COMPANIES BAE Systems and VT Group are considering a takeover bid for Rosyth dockyard owners Babcock International.

Babcock yesterday confirmed that the two firms had been exploring the possibility of a bid. However, the engineering company, which employs about 1200 at the Fife dockyard, said no formal approach had been made.

If the deal went ahead, it could lead to the unification of the country’s shipyards—a move likely to please the Ministry of Defence, which has been pushing for consolidation of the sector.

Investors welcomed the news as Babcock shares soared by as much as 23% to value the company at just under £700 million. Shares in VT were up 5% while BAE moved 1% higher.

Local politicians said they would be seeking assurances that any takeover would not jeopardise the workforce at Rosyth.

Dunfermline West MSP Scott Barrie said, “Until we actually know what’s happening it is difficult to speculate whether this will be a good or a bad thing. What is important is that the owners of the dockyard are fully committed to sustaining the workforce and building on the work that is already there.”

Mr Barrie said in the event of a takeover he would request a meeting with the new owners as soon as possible.

Willie Rennie, MP for Dunfermline and West Fife, said, “A change could be good for Rosyth, but on the other hand Rosyth could lose out. I would like reassurance that Rosyth is not losing out.”

BAE owns yards in Glasgow and Barrow, while VT owns Portsmouth and Babcock has sites in Scotland, including Rosyth and Faslane, where the Royal Navy’s nuclear submarine fleet is maintained.

It is thought a deal could see BAE take on shipbuilding operations from both companies, leaving VT to manage Babcock’s support services business.

BAE and VT already work together on MoD contracts, including the construction of sections for six Royal Navy Type 45 destroyers at Portsmouth which will be completed by BAE in Glasgow.

And BAE, VT and Babcock are all involved in the construction of two new aircraft carriers for the MoD, which wants the £3.5 billion programme to spur consolidation in the shipbuilding industry.

Rosyth will play a key role in the project to build the new generation of Royal Navy aircraft carriers. The two 65,000-tonne warships will be assembled and commissioned at the Fife yard.

A spokesperson for Babcock said, “Over the last five years, Babcock has transformed itself from an engineering conglomerate into a focused support services and asset management business.

“The group currently has an order book in excess of £2 billion, and in December 2005 was selected as a member of the Aircraft Carrier Alliance to construct the bow block and carry out the associated detailed design.

“In addition Babcock will support the alliance in procurement and other elements of the programme.”