Acquisition

BAE SYSTEMS PLC
22 August 2003

22 August 2003



BAE SYSTEMS PURCHASES GKN'S 29% STAKE IN ALVIS

BAE Systems plc ('BAE Systems') today announces that it has agreed to purchase
31,882,534 shares, representing approximately 29% of the issued share capital,
in Alvis plc ('Alvis') from GKN plc ('GKN') for £73 million in cash (equivalent
to 230p per Alvis share).

Alvis is one of the world's leading manufacturers of armoured fighting vehicles.
It has operations in the UK, Scandinavia and South Africa. Its vehicles combine
advanced software and electronic systems with leading-edge vehicle, weapon and
protection technology.

Commenting on the transaction, Mike Turner, Chief Executive of BAE Systems,
said:

'Alvis is an excellent company. We believe that this investment will result in
new opportunities to work together, in a combination that is good for UK Land
Systems capability, and will further enhance Alvis's strong growth potential.'

Completion of the acquisition remains conditional upon BAE Systems receiving
regulatory clearance in Germany.



Issued by

BAE SYSTEMS plc

London


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