Bae And Rolls Seek New Limits

The British government is expected to allow increased overseas investment in British Aerospace and Rolls-Royce, the defence groups. After Labours victory in last years general election both companies requested the government to increase overseas investment to 49.5 per cent from a current ceiling of 29.5 per cent. The department of trade and industry said a decision was unlikely to be announced in the next two weeks but was close to being finalised.

Both BAe and Rolls-Royce said overseas shareholdings were approaching the limit. They complained it was holding back demand for their shares. BAe also regarded the limit as an obstacle to the necessary restructuring of the European defence industry. However, Rolls-Royce is seen by analysts as being susceptible to a takeover bid should the limits be relaxed.