BAE SYSTEMS Agrees To Acquire Control Systems Business From Lockheed Martin For $510 Million
BETHESDA, MD, 27-APR-00 -- Lockheed Martin Corporation (NYSE:LMT) and BAE SYSTEMS North America, Inc. announced today that they have reached a definitive agreement under which BAE SYSTEMS will acquire Lockheed Martin's Control Systems business for $510 million in cash. BAE SYSTEMS North America is a wholly-owned subsidiary of British Aerospace plc, Farnborough, England. Lockheed Martin Control Systems, with facilities in Johnson City, New York, and Fort Wayne, Indiana, is a leading supplier of electronics controls for the commercial and military markets, including aircraft, space, and ground transportation systems. Products include full authority digital engine controls; fault-tolerant fly-by-wire flight controls; mission computers; space vehicle power and control systems; hybrid vehicle propulsion systems; and electronics products for the rail transportation industry. Control Systems had 1999 revenues of approximately $360 million and employs 1,750, 1,200 of whom are based in Johnson City.
This proposed transaction is consistent with Lockheed Martin's strategic initiative to focus on business and technical competencies that will strengthen our position as a leading systems integrator in core aerospace and defense markets, said Lockheed Martin Chairman and Chief Executive Officer Vance D. Coffman. Control Systems is a recognized leader in the markets it serves, and we are delighted to have found in BAE SYSTEMS a buyer who sees opportunities for synergy between this strong business and its own corporate strategy.
Control Systems serves a diverse base of industrial and U.S. government customers including Boeing, General Electric, Lockheed Martin, the U.S. Army, Air Force and Navy, and the New York City transit authority, which late last year became the launch customer for the company's HybriDrive¿ propulsion system for use on 125 new buses. The company's flight control products are used aboard the Boeing 757 and 767, C-17 transport, F/A-18 multirole aircraft, and the V-22 Tiltrotor; the Northrop Grumman B-2 bomber; the Swedish JAS 39 fighter; and the Lockheed Martin-led team's entry in the Joint Strike Fighter competition. Its engine control products have flown some 250 million hours on military and commercial aircraft around the world. Power electronics from Control Systems are on the Lockheed Martin Titan IV and Atlas V launch vehicles.
The proposed transaction, which is subject to government regulatory approvals in the United States, is expected to close late in the second quarter or early in the third quarter of 2000. The parties also will voluntarily seek review by the Committee on Foreign Investments in the United States. Coffman noted that, Lockheed Martin and BAE SYSTEMS are committed to working in partnership to secure all required approvals as promptly as possible.
Control Systems was among several operations identified by Lockheed Martin as candidates for potential divestiture in September 1999, following a comprehensive strategic review of the Corporation's businesses. Lockheed Martin divested its Hanford Corporation subsidiary in December 1999, and currently is evaluating other divestiture candidates, as previously disclosed.
We are making excellent progress on the execution of our plan to focus on core businesses and to generate cash that will be applied to debt reduction, Coffman said. Our objective is to deliver superior performance for our principal customers in aeronautics, space, systems integration and technology services, and to manage our business strategically in a way that creates value for Lockheed Martin's shareholders.
Under the agreement approved by the Boards of Directors of both corporations, BAE SYSTEMS will acquire all of the assets of Lockheed Martin Control Systems. BAE SYSTEMS will offer employment to Control Systems' 1,750 active employees, who will join BAE SYSTEMS North America's 18,300 employees in the U.S. and Canada upon closure of the transaction.
LOCKHEED MARTIN SAFE HARBOR STATEMENT: Statements in this press release are considered forward-looking statements under the federal securities laws, including the Private Securities Litigation Reform Act of 1995, including the statements relating to projected future financial performance. Sometimes these statements will contain words such as believes, expects, intends, plans and other similar words. These statements are not guarantees of our future performance and are subject to risks, uncertainties and other important factors that could cause our actual performance or achievements to be materially different from those we may project.
In addition to the factors set forth in our filings with the Securities and Exchange Commission (www.sec.gov), the following factors could affect the forward-looking statements contained in this press release: timing of regulatory process, conditions imposed by regulatory agencies, uncertainties involved in foreign ownership of companies involved in defense contracting, the political and economic climate domestically and internationally, the ability to obtain or the timing of obtaining future government awards and approvals, the availability of government funding and customer requirements, economic conditions, competitive environment, timing of awards and contracts. These are only some of the numerous factors which may affect the forward-looking statements in this press release.