Denel finishes acquisition of BAE Systems Land Systems South Africa

29 April 2015 by defenceWeb

State-owned defence conglomerate Denel has now acquired Land Systems South Africa (LSSA) from BAE Systems, with BAE yesterday announcing the sale of its 75% stake in LSSA.

Denel took over the majority ownership stake for R641 million ($53 million) in cash. The complete acquisition cost Denel R855 million, as it also bought the remaining 25% stake from BAE Systems’ partner DGD Technologies.

Speaking to defenceWeb last week, Denel Group CEO Riaz Saloojee said that with the acquisition of LSSA, the whole landward mobility capability of the South African National Defence Force will once again be invested in the state. LSSA, Denel Land Systems, Mechem and LMT will be under one roof.

Regarding the future of LSSA, Saloojee said Denel plans to grow the division to produce more vehicle capacity than there is at present. LSSA will be focused on the international market, particularly in areas like the Middle East and Africa.

“This proposed divestiture will further focus our portfolio on our core capabilities and strong franchise positions in tracked, combat, and amphibious vehicles and weapon systems which represent markets where we possess strong franchise positions and discriminating capabilities,” said Erwin Bieber, president of BAE Systems’ Platforms and Services sector, when the deal was initially announced. “We also recognise that the LSSA employees have made a significant contribution to BAE Systems over the last 10 years, and we believe that transitioning ownership to Denel will better position the LSSA business to achieve its full potential working with a strong South African company.”

BAE Systems and Denel signed an agreement to proceed with the sale in August last year, which was anticipated to conclude during the fourth quarter after receiving regulatory and other approvals.

LSSA has comprised three business segments employing approximately 500 people. The LSSA business specialises in the design and manufacture of military tactical-wheeled vehicles, mechanical driveline products, precision-machined components and gears, fire directing systems, and remote weapon launching platforms, subsystems and products.

LSSA already works with Denel, supplying commander and gunner sights for the Badger 8x8 infantry fighting vehicle being developed by Denel Land Systems for the South African Army.

The deal comes as BAE sells off various divisions, such as its Safariland protective clothing and body armour business for $124 million, commercial armoured vehicle activities for $10 million and a small unmanned aerial vehicle business.