Eurosystems transaction

BAE SYSTEMS PLC
29 April 2005






29 April 2005


COMPLETION OF EUROSYSTEMS TRANSACTION

Further to the announcement on 28 January 2005, BAE Systems plc ('BAE Systems')
announces the completion of the EuroSystems transaction agreed with Finmeccanica
SpA ('Finmeccanica').

The EuroSystems transaction comprised:

   •The merger of BAE Systems Avionics Limited and Galileo Avionica SpA to
    form a new Avionics business owned 75 per cent by Finmeccanica and 25 per
    cent by BAE Systems. At completion BAE Systems received the adjusted amount
    of £374 million in cash and will receive a further adjusted amount of £268
    million upon the exercise after May 2007 of BAE Systems' put option or the
    exercise at any time of Finmeccanica's call option over the 25 per cent
    stake.

   •The dissolution of the 50/50 AMS joint venture of BAE Systems and
    Finmeccanica. At completion BAE Systems paid Finmeccanica an equalising
    amount of £50.5 million in cash to account for the difference in value
    between AMS's UK and Italian operations. In addition, Finmeccanica has
    acquired AMS's UK Air Traffic Management business for £6.5 million cash and
    the assumption of debt.

   •The sale of BAE Systems' UK Communications business to Selenia
    Communications Limited, a wholly owned subsidiary of Finmeccanica, for £25.4
    million in cash.

The transaction has achieved BAE Systems' and Finmeccanica's mutual goals of
securing control and clear management responsibility for these significant
European defence industry businesses. BAE Systems will now form an Integrated
System Technologies business by combining the capabilities of AMS's UK
operations and BAE Systems' C4ISR Networked Systems and Solutions business.

Issued by

BAE Systems plc

London




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