Balaena buys Cammell Laird as UK naval spending outlook improves

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Balaena buys Cammell Laird

Highlights

Balaena acquires Cammell Laird's Birkenhead site plus Falmouth and Tyneside shipyards from APCL in a deal valued at about £150mn.
Balaena’s expanded network will include 12 dry docks and is expected to generate £350mn–£400mn in annual revenues and employ more than 2,000 people.
The acquisition coincides with the UK likely to raise defence spending to 3 per cent of GDP, boosting strategic value for naval shipbuilders like Cammell Laird.

Acquisition expands UK shipyard network

As reported by Financial Times, privately held Balaena is buying Cammell Laird's Birkenhead site along with shipyards in Falmouth and Tyneside from APCL, a subsidiary of Peel Group, in a deal worth about £150mn.

Simon Gillett, founder and chief executive of Balaena, says the acquisition will strengthen the UK's ability to serve both the Royal Navy and the global commercial maritime sector. Balaena, which also owns Gibdock in Gibraltar, says integrating the three yards with its existing facilities will create a network of 12 dry docks across the UK and the Mediterranean for ship repair and shipbuilding.

The combined group is expected to generate revenues of between £350mn and £400mn and employ more than 2,000 people, according to Gillett. He says Balaena is funding the acquisition through a mix of bank loans and internal resources.

Balaena also says it plans to modernise APCL's facilities and expand capacity in ship repair, offshore fabrication and low-emission propulsion systems.

Defence policy backdrop lifts strategic value

The transaction comes as the UK appears close to setting out another rise in defence spending while Sir Keir Starmer's government finalises its Defence Investment Plan. The programme, designed to modernise the armed forces over the next 10 years, is expected to support the Royal Navy as the government seeks to rebuild capacity after decades of contraction.

Labour has already committed to increasing defence spending to 3 per cent of GDP in the next parliament from about 2.3 per cent currently, although the exact allocation to naval forces remains unclear. The plan could be announced as soon as Thursday, with the Treasury expected to provide additional funding to cover shortfalls in the coming years.

Cammell Laird remains one of the most established names in British shipbuilding, with a history stretching back almost 200 years and more UK warships built than any other yard. In recent decades, however, pressure on naval budgets has forced the business to diversify, and delays to its polar research vessel project, later named the RRS Sir David Attenborough, contributed to five straight years of losses and a need for emergency shareholder funding from Peel Group.

The sale follows wider upheaval in British shipbuilding after Navantia bought Harland & Wolff and its yards in Belfast, Appledore, Methil and Arnish last year. Cammell Laird and the wider APCL Group are involved in the Type 26 frigate programme led by BAE Systems, and the government's Strategic Defence Review published last year highlights industrial resilience and shipbuilding capacity as priorities.

Our earlier report on conflicting UK productivity and employment signals examined how diverging ONS labour-market measures are obscuring whether the economy is entering a genuine productivity recovery. We noted that the uncertainty matters for policy and markets, because clearer evidence of productivity gains could influence Bank of England rate decisions and the scope for faster growth without reigniting inflation.

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