DRS signs merger agreement with Italian defense contractor

By SHAWN PIATEK
The Tribune-Democrat

May 14, 2008 12:17 am

— DRS Technologies Inc. confirmed Tuesday that it entered into a definitive merger agreement with an Italian defense contractor.
According to the two companies, Finmeccanica, S.p.A. will acquire 100 percent of DRS stock for $81 per share, or roughly $5.2 billion. The deal will require the approval of DRS stockholders, the Securities and Exchange Commission, U.S. antitrust authorities, the Committee on Foreign Investment in the United States and the Defense Security Service.
More than 800 DRS workers, nearly 10 percent of the company’s work force, are at its Laurel Technologies manufacturing plant in Richland Township. The company is based in Parsippany, N.J.
Pending approval, the deal is expected to close by the fourth quarter.
In a joint statement, the companies said that under the agreement DRS will operate as a wholly owned subsidiary. The company will maintain its management and headquarters and doesn’t expect any negative impact on its Laurel Technologies facility in Richland Township.
“We don’t anticipate any changes on the local level in Johnstown other than those that naturally occur with the ebb and flow of business,” said Richard Goldberg, vice president of public relations and communications with DRS.
“It is a very important facility to our company. They do great work there and do a lot of work not only for our customers but for other segments of the organization.”
Finmeccanica specializes in the design and manufacture of a variety of products including helicopters, civil and military aircraft, satellites, space infrastructure and defense electronics. The company has annual revenues of approximately $21 billion.
If the merger is approved, the Finmeccanica/DRS organization will have annual revenues of about $24 billion.
Goldberg said the combined strength of the two companies will allow DRS to compete more effectively in the global military and security market and bid for larger-scale domestic and foreign projects.
U.S. Rep. John Murtha, D-Johnstown, said Tuesday that the potential merger is good news for Johnstown.
“In the past five years, DRS Laurel Technologies has doubled its employment in Johnstown,” Murtha said. “I’m confident that, with the high quality of work being performed in our area, this acquisition will lead to further growth and additional opportunities.”
Goldberg agreed, saying that – while it is too early to speculate about how DRS will be affected – there is reason to believe the Laurel Technologies site will benefit from the arrangement.
Among the types of work Finmeccanica performs is defense electronics. That line, in particular, is a good marriage with DRS Laurel, which performs electronics manufacturing.
“There are a number of existing Finmeccanica defense electronic businesses that will now be within the DRS family,” Goldberg said.
“I think there is some great opportunity here within DRS – not only to have more exposure to new lines of business because of the resources a company like Finmeccanica would bring to the table, but there’s also opportunity to bring job growth from within the operation.”