BAE Unit to buy UDI
- By Steve LeSueur
- Mar 07, 2005
BAE Systems North America Inc. announced today that it has entered into a definitive merger agreement to acquire United Defense Industries Inc. for $4.2 billion.
The purchase will better position BAE for opportunities with the Army's Future Combat Systems program, as well as opportunities repairing and upgrading combat vehicles in the United States and abroad, the company said.
"The combination of UDI with our land systems and U.S. operations will create a world-class business, better able to meet the ever more demanding requirements of our military customers with innovative capabilities, products and solutions," said Mark Ronald, president and chief executive officer of BAE Systems North America of Rockville, Md.
BAE Systems North America is a subsidiary of BAE Systems plc, of Farnborough, England.
Under the proposed deal, BAE would purchase UDI for $75 per share in cash ? about $3.97 billion ? and assume $218 million in debt. The proposed purchase must get regulatory clearances, and shareholders from both companies must approve it. The deal is expected to close by midyear.
UDI of Arlington, Va., designs and produces combat vehicles, artillery systems, naval guns, missile launchers and precision munitions for the U.S. military and its allies. It also provides non-nuclear ship repair and modernization to the Navy. The company has 8,000 employees and had revenue of $2.3 billion in 2004.
BAE announced that it would combine UDI with BAE Systems' U.K. and Swedish land systems businesses to create a global land systems unit, which will be part of BAE Systems North America and led by the UDI management team.
BAE Systems North America has been an aggressive buyer in the government market in recent months. Last year, the company made four government-related acquisitions in the information technology arena, including the October purchase of DigitalNet Holdings Inc. for $593 million.
"By combining UDI with BAE Systems' land systems and North American operations, our capabilities will be strengthened to the benefit of the Department of Defense, U.K. and Swedish Ministries of Defence programs and their respective armed forces," said Mike Turner, chief executive of BAE Systems. "This global land systems business will also build on its strong position in export markets."