HISTORIC Hampshire shipbuilder VT could be out of the industry in three years, it has emerged.

One of the most famous names in British warship-building history, VT Group - formerly Vosper Thornycroft - has put together a deal that could ultimately see it stop building ships altogether.

It is the first time details have been made public of a deal to merge its shipbuilding interests with those of fellow Hampshire defence giant BAE.

As VT announced turnover broke through the £1 billion barrier, bosses revealed they had negotiated a guaranteed price if they sold up after three years.

As reported in later editions of yesterday's Daily Echo, profits at Hedge End-based VT exceeded £74m, but shipbuilding has been making a less significant contribution and today represents only a sixth of its business.

Lucrative Instead the company has focussed on lucrative support services work - largely for the US and British military - and this year landed a £3 billion deal to train pilots, eclipsing £600m of shipbuilding contracts.

The move to create one UK warship-building champion has been encouraged by the Government, which is keen to see consolidation in the industry.

In a statement to investors, VT chairman Michael Jeffries revealed the joint venture would be owned 45 per cent by VT and 55 per cent by BAE, but the pair would have equal board representation and voting rights.

The as yet unnamed company would employ almost 7,000 staff, including more than 600 at VT's Portsmouth shipbuilding works, and would have a turnover of about £700m, principally through working on the next generation of aircraft carriers for the Royal Navy.

World-class' The sale would include Hampshire-based Fleet Support Services and would see VT buy BAE's half-share of Fareham's Flagship Training.

Mr Jeffries said: "The proposed consolidation is in line with the Defence Industrial Strategy and would create a world-class provider and strategic partner for the UK Government.

"It is envisaged that VT will benefit from certain specific rights governing its potential exit after year three with a minimum guaranteed floor price."

The transaction remains subject to final agreement between the parties and the MoD and to VT shareholder approval.

Official confirmation of the deal hinges on whether the Govern-ment orders the two new aircraft carriers, together worth £4 billion.