Wed, 29 Oct 2014 | DIVISION SALE
Caterpillar heavy and general equipment provider Finning has made it known that it is joining a consortium of buyers interested in the Defence Support Group (DSG).
DSG is the maintenance division of the Ministry of Defence. The sale has been ordered, after being first considered in 2010, at a time when severe budget cuts at the government department have come to light recently. The government announced its plans to sell the DSG during the current Spending Review, 2014/15.
Finning joins Carillion, Ryder and Caterpillar in the consortium, lead by Defence Equipment Service Limited (DESL), and brought together to acquire the DSG.
In a press release Finning said: “The aim of DESL will be to transform DSG from a transactional provider of equipment servicing, maintenance, repair, overhaul, and spare parts supplier into an agile and responsive MoD partner.”
Privatising the DSG could reap up to £300 million for the government unit. It is hoped a deal will be agreed in November, with other interested buyers including Babcock, General Dynamics or KBR.
About 2,800 engineers repair and upgrade the army’s equipment for the DSG. Hundreds of its staff took to the streets last week, striking for an eight per cent pay rise, while the division had made £67 million in profits.
An attempt to pass operational control of the DSG to an outside company, with the government to remain owner, failed last year.
An MoD spokesman had this to say about the situation: “The competition for the sale of Defence Support Group and the buy-back of its services through a long-term contract is ongoing. We cannot comment for commercial reasons.”
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