Disposal

BAE SYSTEMS PLC
31 January 2003



               EADS acquires BAE SYSTEMS 25 percent stake in Astrium
                         and takes full control of Paradigm

London / Amsterdam, 31 January 2003 - EADS (stock exchange symbol: EAD) is
acquiring BAE SYSTEMS (stock exchange symbol: BA.L) 25 percent interest (27.5
percent economic share) in Astrium, Europe's leading space company. The
transaction signed on 30 January 2003, will be implemented when all regulatory
clearances have been obtained. Full control of Paradigm Secure Communications
Ltd., formerly held by BAE SYSTEMS and EADS, has been transferred to EADS.

Prior to completion of the transaction, EADS and BAE SYSTEMS will each make a
capital contribution into Astrium of € EUR 84 million (total EUR 168 million).
The cash contribution will facilitate the acceleration of EADS' strategy of
increasing the overall industrial and financial efficiency of the company. EADS,
which already owns 75 percent of Astrium, will acquire BAE SYSTEMS Astrium
shares for € 84 million at completion. Taking into account the cash injection,
BAE SYSTEMS interest will effectively be transferred to EADS for no net cash
consideration. These terms reflect the current deterioration in the commercial
space sector and also EADS' continued intent to position Astrium for a return to
profitability in 2004 and leadership in any future consolidation of the space
industry under unified management.

In July 2002, EADS and BAE SYSTEMS had announced their intention for EADS to
acquire the interest of BAE SYSTEMS in Astrium and formed Paradigm Secure
Communications to address service provision for the proposed Skynet 5 military
communications satellite programme for the UK MoD. Under the original terms,
completion of the sale of the Astrium interest was conditional on completion of
contracts with the UK MoD for the Skynet 5 programme. In the event of EADS not
achieving financial close of the Skynet 5 contract, BAE SYSTEMS will pay €55
million to EADS.

EADS continues to view the Skynet 5 programme as being of strategic importance
to both its UK and space initiatives and is fully committed to signing the
Skynet 5 contract with the UK MoD as soon as possible. BAE SYSTEMS will continue
to support EADS in securing the Skynet 5 contract.

For EADS, the acquisition is a key element in its effort to restructure and
integrate all its Space interests in the UK, France, Germany and Spain. EADS
will gain the strategic and restructuring flexibility required by the current
space market conditions.

Issued by:

BAE SYSTEMS

London

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