Statement regarding Babcock

BAE SYSTEMS PLC
10 May 2006


                        BAE Systems plc ('BAE Systems')

        Statement regarding Babcock International Group plc ('Babcock')

                                                                          
                                                                       10 May 06



On 23 March 2006, BAE Systems and VT Group plc announced that they were engaged
in exploratory discussions with respect to a potential joint acquisition of
Babcock.  These discussions have now ceased.  Accordingly, BAE Systems confirms
that it has no present intention of making an offer for Babcock*.



BAE Systems will continue to consider alternative options to restructure the UK
naval surface ship and submarine sectors, in line with HMG's policy set out in
the Defence White Paper published in December 2005.







*  Pursuant to Rule 2.8 of the City Code on Takeovers and Mergers (the 'Code'),
BAE Systems reserves the right to announce an offer or possible offer for
Babcock and / or take any other action which would otherwise be restricted under
Rule 2.8 of the Code within the next six months if there is a material change of
circumstances or if any of the following events occurs:



(i)                 there is an announcement of a third party offer for Babcock;

(ii)               the agreement or recommendation of the Board of Babcock to an
offer from BAE Systems or from a person with whom BAE Systems is acting in
concert or to a joint offer from BAE Systems and a concert party; or

(iii)             Babcock announces a whitewash proposal or a reverse takeover.



Issued by

BAE Systems plc

London


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