HAMPSHIRE based defence giant BAE looks to have snatched British tank maker Alvis from the clutches of the Americans with a shock £355m bid.

The surprise move saw BAE Systems outgun a £309m offer from US firm General Dynamics, which had already been approved by the Department of Trade and Industry.

Previously, the company, which employs thousands across the county, including 250 in Millbrook, Southampton, had said it did not plan to make a counter-bid.

It is unclear whether the deal will have any affect on the Southampton part of the operation.

Farnborough based BAE Systems, which already owns 28.7 per cent of the Challenger II tank maker, said the proposed deal was "to the benefit of future Ministry of Defence programmes and the UK armed forces".

Alvis, which began life as a car manufacturer in 1919 and now has operations in the UK, Scandinavia and South Africa, and customers in more than 40 countries, employs 2,800 across the country.

Chairman and chief executive Nicholas Prest said: "BAE Systems is a leading international defence contractor whose activities complement those of Alvis."

The deadline for offers is Monday but BAE is almost certain to emerge the victor after General Dynamics threw in the towel and said it would not try to top its offer.