BAE in €3.4bn takeover deal

Defence and engineering group BAE Systems today extended its presence in the US defence sector with the €3.4bn acquisition of Armor Holdings.

Armor, which is based in Jacksonville, Florida, is a major manufacturer of military vehicles and body armour for the military and security forces.

The deal, worth $88 (€65) a share, values Armor at €3.4bn, including the assumption of net debt of €286m.

BAE said it will fund the transaction through a share placing, expected to raise around €1bn, combined with existing resources.

The acquisition represents a significant step in BAE’s strategy to expand and develop its businesses in the US as it moves to increase its status as a leading global defence and aerospace company.

The group said it expects the integration of Armor into its land and armaments division to be immediately earnings enhancing with the potential to increase its US sales by more than $3bn (€2.2bn). BAE already gets about 40% of its sales in the US.

The move comes at a time of increased demand for tactical land vehicles from both the US and the UK, and BAE said the combined businesses of both companies should be well-positioned to meet these needs.

Mike Turner, chief executive of BAE, 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.”

BAE said it expected the acquisition to complete in the third quarter of the year, subject to regulatory clearances.

The deal represents BAE’s second largest purchase in the US in two years, following the acquisition of US armoured vehicle maker United Defence Industries for about $4bn (€2.9bn) in 2005.

Armor reported total sales of $2.4bn (€1.8bn) in the year to December 31, with pre-tax profits of $214m (€157m).

It employs more than 8,000 people at 63 locations worldwide, including a manufacturing plant in Westhoughton, near Manchester in England.