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ALVIS EXPRESSES INTEREST IN VICKERS

11 Feb 02. At last, Alvis revealed its interest in Vickers with the issue ofthe statement on February 11th “The Board of Alvis plc confirms that it isin discussions with Rolls-Royce plc, regarding the possible acquisition ofVickers Defence Systems. These discussions may or may not lead to atransaction.

“Any such acquisition would be financed using Alvis’s own cash resources andbanking facilities.
“A further announcement will be made in due course.”

This announcement comes at a time of adverse press and City commentregarding Rolls-Royce’s debt and accounting policies and has depressed thecompany’s share price top a low of 148p with some brokers suggesting 78p asa good value! The Alvis shares reacted downwards to the announcement, withsome observers seeing little gain to the acquisition at a time of little newbusiness at Vickers, where the company recently lost the mine vehiclecontract to Supacat in an order for 8 vehicles to replace the Alvis Scarabvehicles. It is not known whether the Newcastle and Leeds site freeholds areincluded in the deal or Vickers Specialist Engines which is gaining neworders, having just won an FV430 gearbox refurbishment contract.

However some firms such as INVESTEC Henderson Crosthwaite rate the companyas a buy and see the bad news as ‘overdone’. Certainly the pundits pushingthe share price down have been concentrating on the bad news expected onMarch 7th. However the company has briefed Antony Preston of NAVINT on itsexcellent Naval business (SEE Rolls’ Naval Briefing) and the prospects forthis area particularly in the USA.

The company rumoured to be looking at growing its business in the UK isGeneral Dynamics, where rumours of a bid for Alvis and Vosper Thornycroftstill remain. It may be that the company will allow the £20m bid by Alvisfor Vickers (See Alvis bids for Vickers) to go through uncontested and bidfor the whole group once the rumoured Rheinmetall bid has been made andAlvis has digested Vickers in time for the FRES bids. It may be that thecompany will have a fight on its hands for armoured vehicle companies withUDLP, which recently floated with Carlysle still a 30% shareholder, hasaccess to large funds. Julian Browne, European supreme at Carlysle made nocomment to these suggestions.

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