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EDITIONS
Thursday, 5 December, 2002, 16:55 GMT
US firm buys stake in UK defence labs
Qinetiq 1 balloon
Qinetiq has branched out from defence to modern technology
The Ministry of Defence (MoD) has sold a third of its defence research business, Qinetiq, to the US private equity group Carlyle.

The public-private partnership (PPP) follows the government's decision in March to seek a strategic partner for Qinetiq.

The deal will see Carlyle, whose European chairman is the former prime minister John Major, take on some management control at Qinetiq.

There will be robust safeguards to prevent conflicts of interest

Lewis Moonie, Defence Minister
But the agreement includes a special clause allowing the government to stop Qinetiq's research being shared with other companies that Washington-based Carlyle invests in.

Safeguarding national interest

The investment group is paying 42m for its 33.8% stake in Qinetiq and a further 3.7% of shares will be made available to employees.

The MoD will retain a 62.5% interest in Qinetiq.

But the government will also have the power to impose penalties if the firm acts against the national interest.

Defence Minister Lewis Moonie said: "There will be robust safeguards to prevent conflicts of interest and to ensure that the integrity of the government's procurement process is not compromised."

Mr Moonie also said the deal would allow Qinetiq to continue its development "to become a leading a leading science and technology company that aspires to be the envy of the world".

Cashing in

Qinetiq was formed in July 2001 from the majority of the businesses of the state-owned Defence Evaluation and Research Agency (Dera), incorporating the government's non-nuclear research technology.

The company was originally set to be part-disposed of through flotation on the stock market.

But tough market conditions at the start of the year led to a strategic rethink.

The MoD has reportedly said it will sell its remaining stake in the group within the next three to five years.

Qinetiq has extended its business from pure defence projects to a host of technologies based on its research.

So a system to detect mines buried in mud has been used as the inspiration to create a device to measure the heartbeat of an unborn child, while missile-tracking technology is being applied to track balls in cricket.

See also:

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17 Apr 00 | Politics
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