Disposal

BAE SYSTEMS PLC
01 March 2005


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO OR IN THE UNITED STATES,
CANADA, AUSTRALIA OR JAPAN

BAE SYSTEMS plc ANNOUNCEMENT OF EXERCISE OF OVER-ALLOTMENT OPTION

London, 1 March 2005

BAE SYSTEMS plc ('BAE Systems') announces that in connection with the sale of
series B shares ('Shares') in the capital of Saab AB ('Saab') (the 'Placing'),
ABN AMRO Bank N.V. (London branch) (on behalf of ABN AMRO Rothschild) has given
notice that it has exercised the over-allotment option, referred to in its
previous press release of 24 February 2005, over a further 1,835,000 Shares. 
Including the exercise of the over-allotment option, the gross proceeds of the 
Placing are SEK 1,699.0 million (£129.2 million).


BAE Systems has completed the conversion of 1.2 million of its series A Saab
shares into 1.2 million series B Saab shares to bring its voting rights and
economic ownership in line, given that each series A Saab share has ten votes
whilst each series B Saab share has one vote. Following the Placing (and the
conversion) and including the exercise of the over-allotment option, BAE
Systems' share of the voting rights in Saab will be 20.3%, with economic
ownership being 20.5%.

Should you have any questions with respect to the Placing, please contact Andy
Wrathall at BAE Systems (tel: [phone]) or Richard Heald / Pim van der
Velden at ABN AMRO Rothschild (tel: [phone]).

MEMBERS OF THE GENERAL PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
ANNOUNCEMENT IS DIRECTED ONLY AT PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN
MATTERS RELATING TO INVESTMENTS WHO FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2001 (AS AMENDED) (THE
'ORDER') OR ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ('HIGH NET WORTH
COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC') OF THE ORDER (ALL SUCH PERSONS
TOGETHER BEING REFERRED TO AS 'RELEVANT PERSONS'). THE INFORMATION REGARDING THE
PLACING SET OUT IN THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY
PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT ACTIVITY TO WHICH THIS
ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED
IN ONLY WITH RELEVANT PERSONS.

ABN AMRO Rothschild (an unincorporated equity capital markets joint venture
between ABN AMRO Bank N.V. and N M Rothschild & Sons Limited) and Hoare Govett
Limited are acting for BAE Systems and no one else in connection with the
Placing and will not be responsible to any person other than BAE Systems for
providing the protections afforded to clients of ABN AMRO Rothschild and / or
Hoare Govett Limited nor for providing advice in relation to the Placing.

This announcement has been issued by BAE Systems and is the sole responsibility
of BAE Systems. This announcement is for information purposes only and does not
constitute investment advice or an offer or invitation to acquire or dispose of
any Shares of Saab in Sweden, the United Kingdom, the United States or any other
jurisdiction. This announcement does not constitute an offer of securities for
sale, exchange or transfer, and is not soliciting an offer to purchase, exchange
or transfer any securities, in the United States or in any jurisdiction where
the offer, sale, exchange or transfer is not permitted or to any person or
entity to whom it is unlawful to make that offer, sale, exchange or transfer.
The Shares have not been and will not be registered under the US Securities Act
of 1933, as amended (the 'Securities Act'), and accordingly, may not be offered
or sold in the United States absent registration or except pursuant to an
exemption from, or in a transaction not subject to, registration under the
Securities Act. No public offering of the Shares will be made in the United
States or elsewhere.

Neither this announcement nor any copy of it may be taken, transmitted or
distributed, directly or indirectly, in or into the United States, Canada,
Australia or Japan. Any failure to comply with this restriction may constitute a
violation of United States, Canadian, Australian or Japanese securities laws.

The distribution of this announcement and the offering or sale of the Shares in
certain jurisdictions may be restricted by law. No action has been taken by BAE
Systems or ABN AMRO Rothschild or Hoare Govett Limited, or any of their
respective affiliates, that would permit an offer of the Shares or possession or
distribution of this announcement or any other offering or publicity material
relating to such Shares in any jurisdiction where action for that purpose is
required. Persons into whose possession this announcement comes are required by
BAE Systems, ABN AMRO Rothschild and Hoare Govett Limited to inform themselves
about and to observe any such restrictions.

In accordance with an available exemption from the Swedish prospectus regime,
the Placing has been made without a prospectus given that the minimum
allocation, if any, to a Swedish investor has been at least SEK 300,000.

In connection with the Placing, ABN AMRO Bank N.V. (London branch) will act as
stabilising manager and, as such, ABN AMRO Bank N.V. (London branch) or any
person acting for ABN AMRO Bank N.V. (London branch) may, in connection with the
Placing, over-allot or effect transactions with a view to supporting the market
price of the Shares at a higher level than that which might otherwise prevail
for a limited period after the Placing. However, there is no assurance that ABN
AMRO Bank N.V. (London branch) will undertake stabilisation action. Any
stabilisation action may begin at the time of adequate public disclosure of the
Placing price and, if commenced, may be discontinued at any time and must be
brought to an end no later than 30 days after the date of such adequate public
disclosure. The stabilisation transactions, if any, will be executed on the
Stockholm Stock Exchange through Alfred Berg Fondkommission AB, a wholly owned
subsidiary of ABN AMRO Bank N.V..

Stabilisation / FSA.


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