TANK builders Vickers is set to be sold to armoured car manufacturer Alvis in a £16m deal, it was announced yesterday.

Alvis said it had conditionally agreed with Rolls-Royce to acquire the business interests of Vickers Defence, comprising Vickers Defence Systems and Vickers Bridging, both based in the UK, and a 75 per cent stake in Vickers OMC, based in South Africa.

The consideration for the transaction on a debt-free basis will be £16.2m, to be funded from Alvis's existing cash resources and bank facilities.

There had been rumours earlier this year that Alvis had an interest in Vickers, which employs 556 staff at Scotswood Road, Newcastle.

Alvis said last night there were no plans to close any sites, and said it was too early to say whether any jobs would be lost.

A spokeswoman said there could be "some areas" of duplication, but this was more likely to be "in the management end of things" and said Alvis would be looking at that.

Vickers Defence is a leading supplier of integrated high technology land defence systems. Products include the Challenger II main battle tank.

Its order book amounts to £253m, including an order for the Ministry of Defence with an outstanding value of £218m.

The operations of Vickers Defence Systems will be merged with those of Alvis's existing UK armoured vehicle company, Alvis Vehicles, in a combined UK business.

Vickers Bridging and Vickers OMC will continue as self-standing businesses.

The transaction is subject to Alvis shareholder approval and regulatory approval in the UK and South Africa.

Davey Hall, regional secretary of union Amicus, said neither company had had the "courtesy to inform the union" of the plans. He said Alvis were under an obligation to consult with Amicus about any rationalisation.

He also said the union would resist any kind of restructuring or rationalisation.

"We would also expect that our members' current terms and conditions, together with pensions, are retained," he said.