BAE Systems, Britain's largest defense firm, yesterday topped an offer made by General Dynamics Corp. to buy London-based armored vehicle maker Alvis PLC.
London-based BAE, which already owns 29 percent of Alvis, agreed to pay about $652 million for the company, beating General Dynamics' offer, made in March, of $556 million. The Alvis board had recommended that shareholders accept the General Dynamics offer, but it said yesterday it would withdraw that recommendation.
"In view of the significant premium offered by BAE Systems compared to the offer from General Dynamics, the Alvis board recommends acceptance of the [BAE] offer," Nicholas Prest, Alvis's chairman and chief executive, said in a statement.
The deal would have lifted Falls Church-based General Dynamics into the dominant position in the European tank and armored vehicle market. The company has made several purchases in the international market in the past few years, including a Spanish firm in 2001 and General Motors Defense of Canada last year.
The Alvis acquisition "shows that BAE is going to actively defend" parts of the British market, said Philip Finnegan, corporate analyst with Teal Group.
General Dynamics had received European regulatory approval, including acceptance by Britain's Department of Trade and Industry, which considers competitive issues. But it failed to collect enough shareholder support. The company postponed the deadline for shareholder acceptance several times.
General Dynamics said it "will not revise or extend" its offer beyond the June 7 closing date. A company spokesman declined to comment.
The deal will strengthen Britain's land systems capabilities and benefit future defense programs and the country's armed forces, BAE Systems chief executive Michael J. Turner said in a statement.