UK would look at taking over Roll’s submarine arm

Britain would consider nationalising Rolls-Royce’s business which makes the power systems used in the country’s nuclear submarines, if the company’s difficulties worsen, it was reported.

The government could also decide to merge some or all of Rolls-Royce’s businesses with Britain’s biggest defence company BAE Systems, the Financial Times said.

Rolls-Royce has been subject to takeover speculation after its share price fell 30 per cent over the last year following a series of profit warnings related to a slow-down in its marine engine division and problems in the part of its aero-engine business which services older planes.

The British government holds a “golden share” in Rolls-Royce which means certain deals need its consent, while foreign ownership of Rolls-Royce is limited to 15 per cent as part of rules drawn up when it was privatised in 1987.

But the contingency plans suggested the government is uneasy about the situation at Rolls-Royce which plays an important role in the defence programme.