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Investing.com -- Shares of Babcock International Group (LON:BAB) rose on Wednesday after the company secured a five-year contract with the UK Ministry of Defence (MOD) to provide strategic support for the British Army.
The £1.6 billion deal extends Babcock’s role in maintaining and managing critical military equipment.
Babcock announced that the contract will focus on vehicle maintenance, operational readiness, and asset management for the British Army.
The deal, which includes approximately £1 billion in revenue and an additional £600 million managed as an agent, strengthens the company’s long-standing partnership with the MOD.
The agreement builds on the existing DSG (Defence Support Group) Service Provision and Transformation Contract, which supports the army’s logistics and infrastructure.
The MOD expects the contract to improve equipment availability while modernizing the defense sector through enhanced technology and workforce investment.
“This extension ensures that Babcock continues to provide the armed forces with the support they need, whenever and wherever they are required,” said David Lockwood, chief executive at Babcock in a statement.
UK Defence Secretary John Healey emphasized the contract’s role in strengthening national security and economic growth. “Tanks, armoured vehicles, and kit are the backbone of the British Army. This contract ensures our forces are properly equipped and ready to respond,” he stated.
The contract is expected to contribute to revenue stability and long-term growth, reinforcing Babcock’s position as a key defense contractor.
As part of the contract, Babcock will implement a comprehensive transformation programme aimed at modernizing support operations for the army. The company plans to invest in new technology, facilities, and workforce training across more than 20 UK sites.
This contract aligns with the UK government’s broader defense spending strategy, which has seen increased investment in military capabilities.