CONTACT: NORINE LYONS, GENERAL DYNAMICS (703) 876-3190
JIM TIERNEY, LOCKHEED MARTIN (301) 897-6952
General Dynamics (NYSE:GD) and Lockheed Martin (NYSE:LMT) today announced that they have entered into a definitive agreement under which General Dynamics will acquire the assets of two Lockheed Martin business units for $450 million. The transaction has been approved by the boards of directors of both companies, and is subject to regulatory approvals. General Dynamics will not assume any debt in the transaction, which is expected to close by the end of the year.
The first unit, Lockheed Martin Defense Systems, has major product lines in the area of combat vehicles. The second, Lockheed Martin Armament Systems, is principally a supplier of gun systems. The two units are expected to produce approximately $500 million of revenues in 1996.
Armament Systems has approximately 1,600 employees in Burlington, Vermont, and Milan, Tennessee. Defense Systems, with approximately 1,650 people, is based in Pittsfield, Massachusetts. The transaction agreement provides that General Dynamics will recognize existing labor unions and honor all existing labor contracts.
"This acquisition will be immediately accretive to earnings, and we expect 1997 revenues to be significantly higher than in 1996. In addition, it is consistent with our strategy for our Land Systems business to become a full-line supplier of armored vehicles," said General Dynamics Chairman and CEO James R. Mellor. "Armament Systems and Defense Systems are an excellent strategic fit with our organization. The acquisition expands our participation in armored vehicles from heavy tanks to light vehicles, and from full platforms to major subsystems."
"Furthermore, the acquisition gives us for the first time a strategic position in turret, gun, and ammunition systems for land, sea, and air platforms, and widens our defense business base into ordnance and naval fire control systems," Mellor said.
Lockheed Martin Corporation Vice Chairman and CEO Norman R. Augustine said, "Armament Systems and Defense Systems are good businesses with solid track records, and we believe the acquisition price represents fair value. But as Lockheed Martin has evolved toward an emphasis on larger scale electronic systems and systems integration work, these two operating units are outside of the corporation's core business and technology thrusts. The resulting lack of synergies will preclude these businesses from realizing their full potential within Lockheed Martin. Therefore, we believe Armament Systems and Defense Systems, with their talented and dedicated people, have a greater likelihood to prosper as part of General Dynamics, which has a strong business focus in product areas more closely aligned with these businesses."
Defense Systems builds turrets and transmissions for combat vehicles, and missile guidance and naval fire control systems.
General Dynamics is also acquiring Lockheed Martin's interest in AV Technology LLC, a limited liability company that supplies turret systems and light armored combat systems to the global defense market. AV Technology is located in Chesterfield, Michigan.
Armament Systems designs, develops, and produces advanced gun, ammunition handling and air defense systems, and produces Gatling guns for fixed-wing and rotor aircraft, as well as for land and sea-based applications. Lockheed Martin Ordnance Systems, Inc., a part of Armament Systems, is a leader in the production of ammunition and ordnance products, and operates the Milan Army Ammunition Plant in Milan, Tennessee, for the U.S. Army.
Armament Systems and Defense Systems are operating units of Lockheed Martin Electronics Sector, a global supplier in the design, development, and production of electronics for military and civil applications. Electronics is one of six business sectors within Lockheed Martin Corporation, a highly diversified advanced technology corporation with core businesses in aeronautics; C3I and systems integration; electronics; energy and environment; information and services; and space and strategic missiles. Lockheed Martin, headquartered in Bethesda, Maryland, employs approximately 190,000 people worldwide and has annualized sales of approximately $30 billion.
This is General Dynamics' third acquisition since September 1995, when the company bought shipbuilder Bath Iron Works, and subsequently Teledyne Vehicle Systems in March 1996.