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[15 SEP 98] ALVIS VEHICLES PRESS RELEASE
Alvis And GKN To Create Enlarged Armoured Vehicle Business In Transaction Announced Today
  • Alvis and GKN to form a leading European armoured vehicles business
  • GKN to inject its armoured vehicle activities into Alvis in exchange for a 29.9% shareholding in the new enlarged business
  • GKN will be the largest shareholder in Alvis and will be represented on the Alvis Board
  • GKN Defence is a major supplier of tracked and wheeled vehicles to the British Army. Its main products include: Warrior, Piranha, Simba, Tactica and Aquatrack. GKN Defence is a partner in Eurokonsortium which has been preliminarily selected for the tri-national MRAV programme
  • The Directors expect the transaction to bring substantial benefits:
    • a more comprehensive product portfolio for sale into the international market
    • strengthened Alvis operational management through combination with GKN Defence’s experienced team
    • a stronger position in relation to major future UK programmes, such as MRAV and TRACER, either as a prime contractor or major contributor, potentially leading to a significantly enhanced market position for Alvis in the UK
  • Alvis and GKN expect annual cost savings in excess of 5 million resulting from the merger
  • The transaction is subject to Alvis shareholder approval and regulatory approval
  • Mr N M Prest, Alvis’s Chairman, said:

      "This transaction will position Alvis as one of the leading light and medium armoured vehicle companies in the world. Participation in the MRAV programme on top of our existing order book will enhance long term stability and growth prospects. The combination of Alvis and GKN Defence will bring substantial benefits to shareholders, to customers and, through enhanced export prospects, for the UK."

  • Mr DJ Wright, Executive Director of GKN’s defence activities, said:

      "This is the most important step in the consolidation of the European armoured vehicle industry – a process which we and Alvis see as important for our future competitiveness within the industry. The enlarged Alvis will play a leadership role from a position of strength in a way that will be highly positive for the business and all our shareholders."

Historically, the Alvis armoured vehicle business has been profitable, but it is a relatively small niche producer and the profit stream is substantially dependant on demand for Scorpion and Stormer vehicles, which fluctuates considerably. Similarly, whilst the GKN Defence business has performed very strongly in recent years, deliveries of Warrior to the UK and overseas have now been completed, and the demand will be lower in the near future. Consequently, the business of both Alvis in Coventry and GKN Defence in Telford have under-utilised resources. The proposed transaction will allow this problem to be addressed. Some initial views have been formed on rationalisation of the businesses. These views are subject to consultation with the workforce at Alvis and GKN Defence.

Basically the views are that the projected workload for the two businesses can be planned onto one site and that the existing two sites cannot sensibly be sustained. The practicality of this rationalisation will be investigated. Since the size envelope of GKN Defence’s vehicles is larger than that of Alvis’s it is likely to be more economic and practical to rationalise onto GKN Defence’s site. If these views are confirmed the Alvis site at Coventry would close thus unfortunately putting all jobs at risk. However, in these circumstances there may be an opportunity for the skills of some of the Coventry workforce to be relocated to the site at Telford.

MORE INFORMATION:  Nigel Turner   01203 535455

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CWN / Business / Newswire / Alvis / Press Releases / 15 September 1998

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