BAe buys into Saab

THE consolidation of Europe's defence and aerospace industries took a further step forward yesterday after British Aerospace agreed to pay pounds 269m for a 35 per cent stake in Sweden's Saab, maker of the Gripen combat aircraft.

BAe will also nominate three members of the nine-strong Saab board and jointly select its chairman and managing director along with Investor, the the Swedish group which owns the business.The Saab investment is the second major European deal by BAe, which last year acquired Siemens Defence for just over pounds 300m. The Saab deal does not include the car marque, which is separately owned.

BAe already has extensive ties with Saab across a range of activities including fighter aircraft and aerostructures.

BAe has a joint venture agreement to market the Gripen in wider export markets but yesterday's deal will give it a direct stake in the programme to supply 204 Gripen aircraft to the Swedish air force, one of the largest in Europe. Saab has also tendered successfully recently for aerostructures work on the Airbus, in which BAe has a 20 per cent stake, and will be well placed to undertake further sub-contract work as the Airbus programme expands.

The two have an extensive history of collaboration on guided weapons programmes including the RB70, a medium range missile developed from the UK Sky Flash missile.