Babcock Shipyard Gets Boost From $1.5 Billion Warship Order

(Bloomberg) -- Babcock International Group Plc won a 1.25 billion-pound ($1.5 billion) contract to build a fleet of new warships for the U.K. government, throwing a lifeline to the company’s Rosyth dockyard in Scotland.

The defense contractor emerged as preferred bidder in a “comprehensive, competitive” tender to build five warships at an average cost of 250 million pounds each, the London-based company said in a statement on Thursday. Design work will begin immediately, ahead of the formal award of the contract later this financial year, it added.

Babcock pitched its Arrowhead 140 frigate as a value-for-money ship with the added advantage of supporting Britain’s shipbuilding industry. The Rosyth yard, near Edinburgh, has been downsized over the years as an aircraft-carrier project wound down and wind-energy work ceased. The contract’s boost to the facility will ripple out across the company’s U.K.-based supply chain, Babcock said.

The shares rose 2.6% to 551.8 pence as of 11:47 a.m. in the U.K. capital, valuing the company at 2.8 billion pounds.

To contact the reporter on this story: Andrew Noël in London at anoel@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John Bowker, Tara Patel

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