BAe had an uncomfortable ride in the 1980s. For most of that decade its cash flow return on investment (CFROI) was at or below its cost of capital, while assets employed soared. Although its failure to meet its cost of capital made BAe a value destroyer, it was busily investing more and more capital in growth, often through acquisitions such as Rover, Royal Ordnance and the ill-timed Arlington Properties bid in 1989. When BAe later reversed its investment strategy in 1993 by selling off its corporate jet business, construction arm Ballast Nedam and, in 1994, Rover, its share performance bounced back.
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