BAE and VT near to carrier deal

LONDON (Reuters) - The government is set to approve plans to build two new Royal Navy aircraft carriers, clearing the way for its top two shipbuilders to forge a warship joint venture, industry sources said on Thursday.

"It could come tomorrow, it could come next week, it’s expected this side of the summer recess," said one industry source, referring to the government go-ahead for the ships.

Parliament rises for its summer break on July 26.

Prime Minister Gordon Brown confirmed to parliament on Wednesday that an announcement was due "soon".

"The new prime minister has made it clear how he wants government decisions to be taken and we are waiting for this process to be completed," said a BAE spokesman.

Preparations to build the Royal Navy’s largest ships have been in the works for years and involve BAE Systems and VT Group

among other companies.

BAE and VT are in talks about merging their surface ship businesses, and the two sides are expected to announce that tie-up soon after the government says the aircraft carrier project is moving ahead.

"We hope for an announcement as soon as possible and that would provide the go-ahead for us to finalise the details of the JV shortly afterwards," said a spokesman for VT.

"We’re still pushing hard for progress but we’re .....continued below

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The British government has called for consolidation in various defence-related industries to serve the country’s longer-term equipment and service needs better.

BAE shares were among the biggest gainers in London on Thursday, buoyed after it won U.S. antitrust clearance for its proposed $4.1 billion (2 billion pounds) acquisition of U.S. armoured vehicle and body armour maker Armor Holdings Inc..

BAE was up 3.48 percent at 416 pence versus London’s FTSE 100 index which was up 0.91 percent as of 1:32 p.m..

VT shares were up 0.41 percent at 617-1/2p.