Firm Advises the UK Ministry of Defence on the Sale of the Defence Support Group

17 Dec 2014

International law firm Simmons & Simmons has advised long-standing client the Ministry of Defence (‘MOD’) on the sale of the DSG land business (‘DSG’) in a regulated tender.

DSG is the main provider of maintenance, repair and overhaul services of Army vehicles (for example, tanks and other fighting vehicles, protected mobility and other personnel carriers) for the MOD, employing approximately 2,400 civilian staff. The sale of the DSG is one of the largest and most high-profile sales of Government assets.

In an announcement from the MOD today, it was confirmed that the MOD signed a contract to sell the DSG to a subsidiary of Babcock International. As part of the transaction, a £900 million 10-year service provision contract has been placed with Babcock, effective from 01 April 2015 for the maintenance of the Army’s land vehicles. The contract will transform the way the Army’s vehicles are maintained, repaired and stored and has the potential to grow to around £2 billion as a result of plans, subject to value for money, to optimise a broader scope of services.

The Government’s intention to sell the DSG was announced in the 2010 Strategic Defence & Security Review White Paper and Simmons & Simmons was appointed to advise on the sale in 2012, following a competitive tender involving leading City law firms. The sale process has been conducted within an unusually short timescale for a transaction of this size and complexity - 12 months from publication of the OJEU notice to announcement of preferred bidder.

David English, the MOD’s Head of Business Strategy and Governance said: “Simmons & Simmons has played a central role in securing a successful sale of the DSG land business for the MOD. Led adeptly by Charles Mayo and Richard Armitage, the team provided a responsive and high quality legal service throughout the transaction, exceeding our expectations. Simmons & Simmons worked seamlessly with the MOD team and the other sale advisers to develop the transaction and manage the commercial process. We are very pleased with the outcome we have collectively achieved.”

Commenting on the transaction partner Charles Mayo said: “We are delighted to be acting for the MOD and with the outcome achieved for them on the sale of the DSG land business. The sale of a business combined with a long-term contract back for services from the business being sold gave rise to some complex challenges. For a transaction of this nature and scale, we are very pleased that it has taken just a year from launching publicly the competitive and regulated tender process, to signing.”

The Simmons & Simmons team was led by partners Charles Mayo and Richard Armitage assisted by managing associate Victoria Hewitt, senior solicitor Kim Fowler and associate Jo Spalding with involvement from partners Iain Macfarlane, Richard Binns, Andrea Finn, Steven McNab and Darren Oswick and associates Lydia Torne, Michele Balfe, James Taylor, Coralie McKeivor and Jack Rutherford. Working in conjunction with the MOD’s in-house lawyers Robert Chesterman and Peter Thompson, the firm advised on the corporate, projects, employment, pensions, contracts, IP and IT aspects of the sale.

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