BAE Systems Plc is looking at acquisitions but is being very cautious at a time when the industry grapples with the prospect of sharp cuts in military spending, the head of the company’s US operations said.
Linda Hudson, chief executive of BAE Systems Inc, said at the Reuters Aerospace and Defense Summit that the defense contractor is in an “acquisition mode” and looking at many targets for possible takeover, but it is cautious about not overpaying for assets in a market with uncertain outlook.
“We see a lot of target properties and some of the more interesting ones have extraordinary valuations. Coming up with a business case that makes sense is very very difficult in that regard, particularly with all the uncertainty we see right now from a budget perspective,” Hudson told the Reuters summit.
“We are still looking at lots and lots of properties but we are being more cautious, making sure the financial case is a little bit more compelling,” she said.
“I view right now is not the time to do something kind of bold and outrageous. It’s a time to be thoughtful and careful and deliberate about acquisitions.”
Global weapons makers are bracing for cuts in defense spending sparked partly by this summer’s U.S. debt-ceiling deal. The U.S. Defense Department is cutting at least $350 billion from previously projected spending, and additional cuts of as much as $600 billion could kick in if Congress fails to find at least $1.2 trillion more in deficit reductions by year end.
