Graham Warwick/ATLANTA
BOEING IS TO ACQUIRE Rockwell International's aerospace and defence businesses in a deal valued at $3.2 billion. The acquisition will boost the size of Boeing's defence and space business by more than one-third, taking annual sales to around $9 billion.
Overall, the acquisition will return Boeing to the top of the aerospace manufacturers' league - a position it lost with the merger of Lockheed Martin and its subsequent purchase of sizeable parts of the Loral business.
The Rockwell units to be acquired include the Space Systems division, builder of the Space Shuttle and satellites; rocket-motor manufacturer Rocketdyne; the Autonetics & Missiles division, a producer of tactical missiles; North American Aircraft, prime contractor for the B-1B bomber; and the North American Aircraft Modification division, a specialist in combat-aircraft upgrades. Boeing will acquire Rockwell's 50% share of the United Space Alliance joint venture with Lockheed Martin, selected by NASA to operate the Space Shuttle.
Rockwell's aerospace and defence businesses employ 21,000 people, mainly in southern California, and had sales in 1995 of $3.2 billion. The units will become Boeing North American, a wholly owned subsidiary reporting to Boeing Defense & Space Group, which employs 30,000 and had 1995 revenues of $5.6 billion. Boeing sales for 1995 were $19.5 billion, and projected revenues for 1996 were $22 billion, before the acquisition was made.
Units not acquired by Boeing will be transferred to a "new" Rockwell and include Collins Commercial Avionics, the military Collins Avionics & Communications division and the Communications Systems division, a specialist in air-traffic control. The new Rockwell will be focused on electronics and will have projected annual sales of around $10 billion.
Boeing president Phil Condit says that the units being acquired "-are an extremely good strategic fit-this merger accelerates us on our way to achieving our 20-year vision, which calls for Boeing to be a fully integrated aerospace company designing, producing and supporting commercial aircraft, defence systems and defence and civil space systems." Only minor employment adjustments are expected after the acquisition.
Rockwell chairman Donald Beall says that the sale of the aerospace and defence units is the result of the company shifting its strategic focus to higher-growth commercial and international businesses. Avionics accounts for about 15% of sales, he says, adding: "Collins is definitely part of the new Rockwell."
The companies hope to complete the deal in November, pending anti-trust and shareholder approval.There is only one potential anti-trust issue in the take-over of Rockwell's aerospace and defence business, believes Condit. That is the US Air Force's airborne-laser (ABL) programme, for which teams led by Boeing and Rockwell are the only bidders.
The ABL is a $1 billion programme to develop a high-energy laser system capable of shooting down theatre ballistic-missiles during the boost phase.
The two teams have submitted bids to build and fly a proof-of-concept system on a Boeing 747-400, with the winner to be selected in January 1997. Condit says that the ABL competition will continue, with Boeing "building firewalls" between the teams.
See Business, P14.
Source: Flight International
