UK contractor Babcock misses out on big defence deal

LONDON (Reuters) - Defence and engineering firm Babcock <BAB.L> has missed out on a big armoured vehicle maintenance contract, Britain's defence ministry said late on Saturday, barely a week after the firm cut sales forecasts due to trouble in its marine division.

"Value for money is always one of our key considerations and on that basis we have decided not to progress Babcock's proposal," the Ministry of Defence said in a statement.

The Sunday Times newspaper said the contract to maintain 2,300 armoured vehicles would have been worth 1 billion pounds ($1.3 billion) to Babcock.

A defence ministry spokesman was not immediately able to confirm the value of the deal.

Babcock's shares fell as much as 10 percent after it cut its sales growth forecasts earlier this month, blaming delays to British government spending on submarines and the completion of aircraft carrier work.

"Babcock remain one of our key industrial partners providing an essential contribution," the defence ministry said.

(Reporting by David Milliken; Editing by Sandra Maler)