BAE SYSTEMS AND RHEINMETALL AGREE RESTRUCTURING OF STN ATLAS JOINT VENTURE

BAE SYSTEMS and Rheinmetall DeTec have agreed to restructure STN Atlas, in which they hold 49% and 51% respectively, by splitting this joint venture into two wholly-owned companies, ATLAS ELEKTRONIK GmbH ("ATLAS�) and Rheinmetall Defence Electronics GmbH ("RDE�).

STN Atlas principally comprises naval systems, land systems, air systems and production activities. ATLAS, a wholly-owned BAE SYSTEMS subsidiary, will acquire the naval systems business based in Bremen and Hamburg, together with the production activities. RDE, which will become a wholly-owned Rheinmetall subsidiary, will own the land and air businesses based in Bremen.

The jointly owned STN Atlas company generated profit before interest of €35m on sales of €573m in 2002. The business activities that on completion will be owned by ATLAS had pro forma profit before interest of €22m on sales of €250m in 2002.

Regulatory approvals for this transaction have been obtained and completion is expected to take place before the end of August. Shortly after completion, STN Atlas GmbH will change its name to Rheinmetall Defence Electronics GmbH.

Stephen Henwood, BAE Systems Group Managing Director International Partnerships, said, "This transaction allows both partners to pursue their own strategic objectives. For BAE Systems, ATLAS ELEKTRONIK is an excellent naval systems business, with clear operational leadership, whose capabilities will be developed with the rest of the company, while providing access to new markets.�