BAE SYSTEMS is expected to embark on a buying spree in America with the £5 billion war chest that will result from its decision to sell its 20 per cent stake in Airbus.

Analysts last night predicted that the UK defence company would look to seize a few US companies with valuations of between $1 billion (£570 million) and $3 billion after raising between £3 billion and £4 billion from the stake sale. With a possible £2 billion already on its balance sheet, it would have some £5 billion to spend. Companies such as Armor Holdings, an armour manufacturer, and DRS Technologies, a defence electronics group, could be targets, Merrill Lynch analysts believe.

The top six US defence companies, including Lockheed Martin, General Dynamics and Raytheon, are far too big for BAE to buy. It also last week ruled out buying L3 Communications, the defence electronics group valued at $10 billion.

Shares in BAE, which have risen more than 70 per cent in the past 12 months, were up 2¾p to 433¾p yesterday.

However, speculation that an American acquisition by BAE was imminent was yesterday scotched by the company, which said that no acquisition was linked to its decision finally to exercise its “put” option on its 20 per cent Airbus stake.

Mike Turner, chief executive of BAE, Britain’s biggest manufacturer, said: “Airbus has been an excellent investment for BAE Systems during a period of innovation and growth. It has developed into a world-class company at the forefront of its industry and is well positioned for the future.

“We believe that now is the right time for us to divest our Airbus shareholding to allow us to concentrate on our core transatlantic defence and aerospace strategy.”

Mr Turner also met Alan Johnson, the Trade Secretary, and told him that safeguards on British jobs that were put in place when Airbus was formed would be honoured. He also said that the pensions of Airbus staff would be protected, if they switch to a new pension fund to be set up for the company.

Airbus has been a non-core asset for BAE since 2000, when the group stepped back from operational involvement in the aircraft builder but kept a 20 per cent stake.

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