According to reports, BAE Systems
and VT, revealed that they were considering a joint bid for Babcock, the support services and shipbuilding group, in a move that could trigger the consolidation of Britain's warship construction capability.
VT could join with Babcock as a support services group, which could then sell VT's shipbuilding business to BAE and still have critical mass.
This would create a single shipbuilding entity in BAE, which would find it easier to cut capacity and become more efficient.
Source: The Guardian and The Financial Times