Defcon: UK armorer to supply aging, busy US military
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Manufacturing News, Source : The Manufacturer US
Published : 22 May 2007 20:47
BAE Systems Inc. has made an aggressive offer for US-based Armor Holdings, of $88 per share. Along with $388 million in debt, the deal is worth $4.5 billion.
BAE Systems Inc. is the US arm of UK-based BAE Systems Plc. Aerospace Daily & Defense Report summed it up that the deal “would add to the London-based defense giant's heft in the US while furthering its push into the global land systems market.”
Janes Defence Industry, the UK-based publisher and analyst group, describes BAE as “the second-largest land systems supplier in the world.” Jane’s further sees BAE as having “positioned itself to take advantage of merger and acquisition opportunities in core markets,” having sold its 20 per cent stake in Airbus to majority shareholder EADS for $3.5 billion in 2006.
Commenting on the proposed acquisition, Mike Turner, BAE Systems’ chief executive said “Armor Holdings is a strong business with an excellent track record and a highly regarded management team. The combination of Armor Holdings with BAE Systems’ existing land systems business will strengthen our capabilities to the benefit of the US and UK armed forces and their international allies.”
Armor Holdings Jacksonville, FL, manufactures tactical combat vehicles, vehicle armor (e.g., for the Humvee), and body armor, which was its first product. Its $3 billion in sales in 2006 would bolster BAE’s $11 billion in 2006, and according to Aerospace Daily, would leave BAE the Pentagon's sixth largest contractor.
BAE has, as a goal, to make 50 percent of its sales in the US, and this acquisition should nearly close the gap. In 2005, BAE bought United Defense, maker of the Bradley tank, for roughly $4 billion, according to an Associated Press story. As AP reports, the market for armed wheeled vehicles is expected to expand quickly, to build up the US armory and to replace aging equipment.
The acquisition should close in Q3, after approval by Armor shareholders, and by the Committee on Foreign Investment in the United States, which reviews transactions that could have national security implications.
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