WIREDGOV

Sale of the Ministry of Defence's shareholding in Qinetiq

MINISTRY OF DEFENCE News Release (204/2008) issued by COI News Distribution Service. 9 September 2008

The Ministry of Defence (MOD) announced today the sale of its remaining ordinary shares in QinetiQ Group plc at a price of 206 pence per share.

Minister for Defence Equipment and Support Baroness Taylor said:

"I am pleased to announce that with this sale of shares in QinetiQ we have completed the final stage of its privatisation.

Ten years ago our in-house defence laboratories faced a difficult and uncertain future. The privatisation of QinetiQ transformed it into a successful British-based company employing around 13,000 people, and raised £830m for the taxpayer.

QinetiQ and its staff can be rightly proud of what the company has achieved since it was created in 2001. They remain a very important supplier to the MOD and we wish them every success.

Although we no longer have a financial stake in QinetiQ, we will retain a special share in the company to protect the UK's defence and security interests."

Notes to Editors

1. Since 2001, QinetiQ has been transformed from the MOD's in-house research and development organisation into an international defence and security company. A fact sheet is available online on the MOD website: http://www.mod.uk/DefenceInternet/FactSheets/ModAndQinetiq.htm

2. The MOD's entire holding of ordinary shares in QinetiQ, comprising 124,885,445 ordinary shares were successfully placed with investors. This represents, in aggregate, approximately 18.9% of QinetiQ's current issued ordinary share capital. The shares were placed with investors at a price of 206 pence per share, raising over £254m (net of estimated costs) for the taxpayer. The QinetiQ share price closed at 223.5 pence per share on 8 September 2008, the day before the placing. The offering price represented a 7.8% discount to this share price. A discount is customary for transactions of this scale. The weighted average price per share since QinetiQ's flotation on the stock exchange has been 194 pence.

3. The MOD also retains a special share which is independent of its financial stake in the company. This allows the MOD to prevent individuals or organisations that could represent a threat to UK defence and security interests or pose a conflict of interest (e.g. defence manufacturers) from acquiring a significant stake in the company. It also ensures that MOD customers will continue to be able to use QinetiQ as a source of impartial advice.

4. QinetiQ was floated on the stock market in February 2006 at a price of 200 pence per share. In February 2007, The Carlyle Group (who were MOD's strategic partner in the privatisation process) sold its remaining stake in QinetiQ for 205 pence per share.

5. Credit Suisse Securities (Europe) Limited, JPMorgan Cazenove Limited and Merrill Lynch International acted as joint global co-ordinators and bookrunners, and N M Rothschild & Sons Limited acted as independent financial adviser, to the MOD in respect of the placing. Credit Suisse Securities (Europe) Limited, JPMorgan Cazenove Limited, Merrill Lynch International and N M Rothschild & Sons Limited are acting for the MOD only in connection with the placing, and no one else, and will not be responsible to anyone other than the MOD for providing the protections offered to clients of Credit Suisse Securities (Europe) Limited, JPMorgan Cazenove Limited, Merrill Lynch International and N M Rothschild & Sons Limited nor for providing advice in relation to the placing.

PRESS RELEASE

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