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Finmeccanica to acquire DRS
The transaction, valued at approximately US$5.2 billion (Euro 3.4 billion), inclusive of approximately $1.2 billion in net debt, following the conversion of DRS' convertible notes, represents a premium of 27 percent to DRS' closing share price on May 7, 2008; it is also a 32 percent premium over DRS' thirty-day average stock price traded on the NYSE. The Boards of Directors of Finmeccanica and DRS have each approved the terms of the agreement. DRS will operate as a wholly-owned subsidiary, maintaining its current management and headquarters. DRS and Finmeccanica will comply with all national security requirements and will propose to the US Defense Security Service (DSS) that the company operate under a Special Security Agreement (SSA), with its own board of directors comprised predominantly of US citizens holding security clearances and a government security committee. With increased business opportunities that will arise following the transaction, it is expected that DRS will expand its overall employment base. "Today's transaction is a perfect fit; the complementary technologies and platforms will establish a new competitive player in defence and security markets in the US and around the world," said Pier Francesco Guarguaglini, chairman and chief executive officer of Finmeccanica. "DRS' dramatic growth over the past five years and the premium provided through this acquisition will provide attractive returns for our stockholders", said Mark S. Newman, chairman of the board, president and chief executive officer of DRS. "This investment in DRS, with an increased emphasis on research and development, will mean the combined company will be able to compete for and win additional contracts around the world, accelerating growth and expanding opportunities at our facilities in the US". For DRS, the combination with Finmeccanica will enable an American company and brand to better compete in the global military and security market. The transaction will help the new company to bid and win larger scale projects in the US and abroad. For Finmeccanica, the transaction will boost its existing position as a top-tier competitor, enabling it to enhance the product and service solutions it provides to its customers. Finmeccanica's platforms and areas of expertise (helicopters; defense electronics and security; aeronautics; space; defense systems; energy; and transportation) complement DRS' growing market penetration by its four primary business segments: Command, Control, Communications, Computers & Intelligence (C4I); Reconnaissance, Surveillance & Target Acquisition (RSTA); Sustainment Systems; and Technical Services. DRS will lead Finmeccanica's defense electronics efforts in the US after the transaction closes. The transaction is subject to approval by the stockholders of DRS, the receipt of regulatory approvals and other closing conditions, including review by US Antitrust Authorities, the Committee on Foreign Investment in the United States (CFIUS) and the Defense Security Service (DSS). The transaction is expected to close by the fourth quarter of 2008.
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Italian company Finmeccanica has signed a deal to acquire DRS Technologies, Inc. a US supplier of integrated defence electronics products, services and support. Finmeccanica will acquire 100% of DRS stock for US$81 per share in cash. The transaction allows Finmeccanica to consolidate its international role as a supplier of integrated systems for defence and security, entering the US market as a key player. It also allows DRS to seek new business opportunities in the US and abroad.