BAE Systems is on the hunt for space companies as it races to bolster its satellite communications work.
The FTSE 100 defence giant is looking at bolt-on takeovers as it develops cutting-edge programmes such as the Tempest project to design the next generation of fighter jets.
Air combat is becoming increasingly reliant on space technology and communications.
Future air combat: BAE Systems is looking at bolt-on takeovers as it develops cutting-edge programmes such as the Tempest project to design the next generation of fighter jets
An industry source said: ‘BAE has been sniffing around and looking at space companies that could further its military work, not commercial.
‘BAE exited some work in this area previously but now knows that for future combat aircraft –such as the Tempest programme – there is a heavy reliance on space for communications.’
The source added: ‘I think they’re looking at small, niche companies for now, possibly university spin-offs.
‘It’s about having the knowledge of how to manage communications and other capabilities with satellites which means they won’t have to be reliant on someone else.’
BAE bought In-Space Missions, a small British satellite company, for around £13million last year.
The most recent government survey of the UK space industry found more than 45,000 people were working in the £16.4billion sector.
Mark Boggett, chief executive at space investment group Seraphim Capital, said there is a rich crop of home-grown firms that are becoming targets for both British and overseas buyers.
Boggett said: ‘I believe there’s a large number of UK companies that will be caught up in a wider consolidation.’
A recent report by Oxford Economics found that BAE generated more than £10billion for UK GDP in 2020, equivalent to 0.5 per cent of the entire British economy.
A spokesman for the group said: ‘We don’t comment on speculation. We continue to consider investments in value-enhancing acquisitions.’
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