The British multinational defence, security, and aerospace company BAE Systems has announced concrete plans to sell a majority stake in its UK-based combat vehicles unit to the Germany-based defence contractor Rheinmetall Group. The deal is worth EUR28 million and part of a greater plan to collaborate and develop a joint venture to design, build and innovate military vehicles. Basically, the underlying idea is to ensure the long-term sustainability of BAE’s tank business.
The agreement, however, is still subjected to legal approval from government regulators and expected to materialise in the first half of 2019. If all goes well, the move will support as many as 400 jobs in the United Kingdom. The joint venture will be known as Rheinmetall BAE Systems Land (RBLS) wherein Rheinmetall will operate with a 55% stake while the remaining 45% will be held by BAE Systems. The headquarter for RBLS will be located at BAE’s facility in Telford, England.
RBLS will be organised to deliver new mechanised infantry vehicles and other combat automobile programmes for the Ministry of Defence and British Army. It will constitute as part of Rheinmetall's vehicle systems department and contribute to the company’s global military contracts.
At the backdrop of a growing market for wide-ranging armoured vehicles and related equipment, there has been an upswing in investments to support technological advancements in the use and utility of unmanned ground vehicles, artificial intelligence, virtual training, and survivability equipment. Therefore, RBLS is stepping in the right direction to serve domestic as well as international customers.
It is being viewed as a highly rewarding collaboration which is blending in Rheinmetall's expertise in military vehicles technology and products, together with BAE's existing know-how. Thus, creating a military vehicle industry giant in the European market. The future projects could potentially create a vast number of jobs opportunities in the UK.
The stakeholders are quite positive about the outlook in the future and excited that the project will bring about diversification of products and exchange of technological know-how to develop and deliver off the charts, products and services. There is a scope of promising growth with the combined capabilities of both the firms.
Besides business expansion, employment generation is also at the heart of the deal. In fact, the recent employment figures released by the government of UK depict that the UK employment rate was at an all-time high of 75.8% in 2018 while the unemployment rate was at a 43-year low of 4.0%. There has been a rising number of vacancies around 853,000 and almost 328,000 more people joining the workforce as compared to 2017.
The underlying driving factors for an upward trend in job creation includes extensive support from the government to back businesses, forging profitable international colorations, closing tax loopholes, strengthening workers’ rights, tightening the rules, investing in infrastructure, sustained public investments, tackling inequalities in employment and developing a modern industrial strategy. A stronger job market and favourable regulations are evidently supporting all sectors in the economy.
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