British army Challenger tanks

News of the 280p per share offer for Alvis came as the UK firm unveiled a rise in annual pre-tax profits to �19.8m, from �16.5m the year before.

Alvis took control of Rolls-Royce owned Vickers - which makes the British army's Challenger 2 battle tanks - in October 2002.

General Dynamics described Alvis as "an excellent strategic fit" for the firm.

'Significant premium'

As well as tanks, Alvis makes armoured infantry fighting vehicles, armoured personnel carriers and light armoured vehicles.

General Dynamics boss Nicholas D Chabraja said the Virginia-based firm's offer provided "an opportunity for Alvis shareholders to realise their investment for cash at a significant premium to the recent market price."

The takeover offer is a 33% premium to the Alvis' closing share price of 210.5p on Wednesday.

Directors at Alvis have recommended their shareholders accept the offer.

The two companies did not say how the deal would affect jobs at Alvis, which employs around 1,800 and has operations in Scandinavia and South Africa.