UPDATE 2-BAE picks former General Dynamics exec to head U.S. unit

Tue Jan 7, 2014 1:07pm EST

LONDON/WASHINGTON Jan 7 (Reuters) - Britain's BAE Systems Plc chose Jerry DeMuro to head its U.S. business, pinning its hopes on the former General Dynamics executive to steer the weapons maker through U.S. military cuts that are expected to bite over the next decade.

DeMuro, who will begin as president and chief executive of the U.S. unit on Feb. 1, will replace Linda Hudson, who announced her retirement in August last year. BAE, which announced the appointment on Tuesday, generates about 40 percent of its total revenue in the United States.

Defense suppliers to the U.S. government face a challenging time over the next decade, given $487 billion in planned cuts to the U.S. military budget and additional sizeable reductions mandated by Congress.

DeMuro, age 58, follows Hudson, 63, to BAE from U.S. weapons manufacturer General Dynamics. He was previously executive vice president and corporate vice president at General Dynamics's $11 billion information systems and technology group. DeMuro left General Dynamics in February 2013 after being passed over for company's top position, a job now held by Phebe Novakovic.

"His experience will be of immense benefit as the company strives to maintain its strong performance in the United States core defense market and increase its focus on new international and commercial opportunities," BAE Chief Executive Ian King said.

At General Dynamics, DeMuro managed the acquisition and integration of 22 companies, as well as 8 divestitures, with a cumulative value of $5 billion, according to a fact sheet compiled by BAE.

In its global business, BAE faced investor worries over its growth prospects last year after the United Arab Emirates pulled out of talks to buy 60 Eurofighter Typhoon combat jets in a $9.8 billion deal.

Hudson, the first woman to head a major U.S. defense operation, said she worked closely with DeMuro at General Dynamics for many years and called him "an experienced and compassionate leader."

"Jerry is an excellent choice to take the helm of this company that - thanks to your collective efforts over the past several years - has established itself as a major player in aerospace and national security," Hudson said in a blog posting for employees.

Hudson, who joined BAE in 2007, said she would remain on the board of the U.S. unit as an outside director until April 2015.

"After many decades in this industry I have been through good times and bad, seen spending go up and down, but the very best people and companies adapt, endure and continue to move forward to meet the needs of our customers," she said.

Shares of BAE ended down 1.2 percent in trading Tuesday on the London Stock Exchange.

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