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Last Updated: Thursday, 10 May 2007, 07:08 GMT 08:08 UK
Naval dockyard bought for 350m
Plymouth's Devonport naval dockyard
Several major warships and nuclear submarines are based at Devonport
Engineering group Babcock International is to buy Plymouth's Devonport naval dockyard in a 350m deal.

Devonport maintains, upgrades and fuels the Royal Navy's submarines, and the deal is set to make Babcock the UK's leading naval maintenance firm.

Babcock is buying Devonport Management Limited (DML) from a consortium which includes Kellogg Brown & Root, Balfour Beatty and Weir Group.

Babcock said it would carry out a 90m share placing to help fund the deal.

'Significant benefits'

The news came as Babcock announced a 38% rise in full-year pre-tax profits to 57m ($113.7m).

The group said acquisitions and an "excellent" performance from its defence businesses had driven profit growth.

Looking ahead, it added the "combined strength of Babcock and DML will yield significant strategic and financial benefits to the Ministry of Defence... whilst creating significant value for Babcock's shareholders".

Babcock already maintains the Rosyth and Faslane submarine bases in Scotland.

DML supports nuclear submarines and surface vessels for the Royal Navy and has controlled the Plymouth dockyard since 1997.

Babcock is understood to have beaten a rival bid from US private equity firm Carlyle to buy DML, after earlier interest from defence rivals Rolls-Royce and BAE Systems.

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