Saab ups SA stake

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 14 Sept 2007

Saab, the Swedish defence giant, has increased its ownership in local defence IT house Cybersim from 25% to 75%, for an undisclosed sum.

The deal is expected to better position Saab and its former partner to win a key R27 million army command-and-control programme, labelled "Project Legend".

The company will, on 2 October, launch a new subsidiary, Saab Systems SA, combining Cybersim and Grintek Integrated Defence Systems (Grids), a business already in its stable.

Saab says the "formation of this entity is a further step in the consolidation of the local strategic command, control and intelligence capability, as well as safety and security solutions.

"Both these companies have had strong ties with the SA National Defence Force (SANDF) in particular, the SA Police Service, as well as other government departments. It is our strongest intention not only to maintain, but also to build on these strategic ties."

Grids has a number of ongoing defence IT projects, including a R428 million maintenance contract to maintain the SA Air Force's command-and-control network under "Project Janitor" and "Project Bedmaker".

Saab and Cybersim have jointly tendered for the Legend project. Also in the running are the South-African-owned Fulcrum Group with its European partner EADS and the French-owned African Defence Systems.

The ministry of defence recently told Parliament that its Armament Acquisition Steering Board will make a decision on the winning bidder next month.

A briefing on the restructuring of the SA Army last week indicated Project Legend could be significantly expanded in the next few years. The contract could eventually be worth up to R135 million.

Unhappiness

Saab's growing presence in the local defence market has disconcerted some of the SANDF's command cadre and others in the defence industry. They are concerned over the strategic implications and the question of intellectual property (IP) rights.

Similar concerns have been raised regarding BAE Systems, EADS and Thales, the latter the owner of African Defence Systems.

Saab's response to this has been that it separates issues of ownership and IP.

"The focus and emphasis is wholly aimed at maintaining security, supportability, doing things the 'African way', [and] locally available and controlled IP.

"These core values will be promoted by utilising a local skills base. BBBEE [broad-based black economic empowerment] is automatically fully supported by and incorporated in Saab Systems SA."