MoD relaxes control over Qinetiq
The Government has agreed to relax its control over defence firm QinetiQ to make it easier for it to buy or sell businesses and compete more effectively.
The maker of bomb-disposal robots and sniper detectors was privatised 10 years ago but the Government retained a 'golden share', which gave it powers over the company in the interests of national security.
The Ministry of Defence has now waived its right to veto any of the company's activities, although it will retain powers to block shareholders building up too large a stake.
Shares were up 2% as it is expected the move will help the Hampshire-based firm compete more effectively and give it more freedom to make acquisitions or sell off some divisions.
William Shirley, an analyst at Liberum Capital, said: "This is another milestone in QinetiQ becoming a more commercial organisation. However, we continue to view QinetiQ as an unlikely takeover target due to conflicts of interest if acquired by another manufacturer."
QinetiQ, which employs more than 11,000 staff worldwide, makes a wide range of James Bond-style hi-tech products, including netting designed to protect armoured vehicles from rocket attacks.
Other products include its TALON remote-controlled military robot, which is used for bomb disposal and reconnaissance operations in Afghanistan and Iraq, and the SWATS sniper detection system, which is fastened to the shoulder and can pinpoint hostile gunfire in a fraction of a second.
The agreement with the MoD comes as the group, which swung back to profit in the year to March 2011, looks to implement a 24-month improvement plan as the defence industry is squeezed by budget cuts. Chief executive Leo Quinn said: "This is a positive step in further modernising QinetiQ and was one of the key objectives of our 24 months self-help plan."
In the UK, the Government aims to reduce its defence spending by 8% over the next four years in a move likely to restrict and delay new contracts. An MoD spokesperson said: "MoD retains other controls to help protect national security and QinetiQ's independence and impartiality."
Shares were also boosted after the group said it was to bank a £65 million one-off payment from the MoD to settle liabilities it would otherwise have received over the next 10 years. It added that it is on track to meet its expectations for the year to the end of March although it warned visibility on contracts remains lower than normal.