Atlas Elektronik is a specialist maritime electronics business

German-based Atlas Elektronik produces defence systems such as sensors for submarines and other military vessels.

BAE said several potential buyers had shown interest in the business, which analysts believe could fetch close to 300m euros (�200m).

Defence firms EADS and Thales are among those thought to be interested.

Interested suitors

EADS, parent company of aviation firm Airbus, said on Friday that it was keen to enter the maritime electronics sector, though did not mention Atlas Elektronik specifically.

BAE Systems confirmed that several companies would be given access to financial information about the Bremen-based business, the first step in a sale process expected to take several months.

A number of companies have been invited to participate in the due diligence process BAE Systems spokesman

In addition to EADS and Thales, Italy's Finmeccanica, Sweden's Saab, German firms ThyssenKrupp and OHB Teledata, and US business L3 Communications have also been invited to conduct 'due diligence', according to a report in the Financial Times.

BAE signalled in June that it would consider selling Atlas.

Analysts have long expected it to dispose of the business as BAE increasingly focuses on building its US interests.

"A number of companies have been invited to participate in the due diligence process which may or may not lead to offers," a BAE Systems spokesman told the BBC.

Political dimension

A sale would be politically sensitive since the German government is Atlas' largest customer.

Analysts said Berlin would need to be reassured about the future of the business before a deal could go ahead.

"Given the political ramifications of a potential sale, we do not believe that the business will necessarily go to the highest bidder and furthermore believe that a deal will take some time to finalise," said Colin Crook, an analyst with Swiss bank UBS.