London — BAE Systems, Europe's biggest defence contractor, will sell about 14% of Saab — worth as much as $270m — as the company reorganises international ventures to help fund acquisitions in the US.

BAE would place as many as 15,2- million shares in Saab, the Swedish maker of the Gripen fighter jet, with institutional investors, reducing its stake to about 20%, the company said.

BAE plans to keep the remaining holding as a long-term investment.

"They are raising a lot of money by pruning ventures, either to continue acquisitions in the US or plug the pension gap," said Andrew Gollan, an analyst at Numis Securities with a "hold" rating on the stock.

"BAE is also exiting Saab because they can't market both the Gripen and the Eurofighter."

BAE is a partner in the Eurofighter combat-plane venture and made five acquisitions in the US last year.

The shortfall in BAE's US and UK defined-benefit retirement plans widened to £2,6bn after tax from £2,1bn at the end of 2003, the company said in September.

BAE, based in London, said in December it would reduce its stake in Linkoeping, Sweden-based Saab and cede marketing responsibility for Gripen.

BAE said last month it might receive $1,2bn from Italy's Finmeccanica as it reorganises its defence electronics businesses. The company would make a "modest profit" on its investment in Saab, depending on the pricing of the share sale, said a spokesman.

"This is not a desire to exit Europe, but part of an increasing focus on performance,"

With acknowledgements to Matthew Fletcher and the Business Day.