Armor Holdings deal closed; BAE Systems welcomes newest employees
Following regulatory approvals and the vote of Armor Holdings' shareholders to approve the acquisition agreement between Armor Holdings and BAE Systems, the companies recently announced the acquisition had been completed. "Day One" celebrations to welcome former Armor Holdings employees to BAE Systems and provide opportunities to meet with members of the BAE Systems leadership team are scheduled for early August at Armor Holdings’ facilities.
The definitive agreement was originally announced on May 7, 2007, when BAE Systems offered US $88 per share of outstanding Armor Holdings stock, along with the assumption of $388 million in debt, which valued the transaction at approximately $4.5 billion. Armor Holdings reported 2006 sales of $2.3 billion and a before-tax profit of $214 million.
The acquisition clearly underscores BAE Systems' stated strategy of expanding and developing its business in the U.S., expanding its global land systems business, and developing its through-life support, solutions and services activities.
"Armor Holdings is a welcome addition to BAE Systems," said Mike Turner, BAE Systems chief executive. "Armor Holdings is a strong business with an excellent track record and a heritage of innovation and technology. The integration with BAE Systems' existing land systems business will strengthen our ability to provide our customers with innovative capabilities, products, and services."
"BAE Systems and Armor Holdings share a common commitment to the men and women of the armed forces," added Walt Havenstein, president and CEO of BAE Systems, Inc. "Armor Holdings’ expertise in automotive design and lean, high-volume manufacturing technologies, in combination with BAE Systems' expertise in combat vehicle design, rapid prototyping and survivability systems, will strengthen our ability to provide armed forces with tactical wheeled vehicles with increased survivability."
BAE Systems strengthens its position as one of the world's leading land systems businesses and is expected to increase its revenue stream by the addition of revenue from several tactical vehicle programs. BAE Systems can leverage its global marketing presence by offering the Armor Holdings tactical wheeled replacement programs in overseas markets.
The combined business will be well positioned to address significant new tactical vehicle requirements. The U.S. and UK armed forces, and many other nations' armed forces, are experiencing an increased demand for tactical wheeled vehicles with increased survivability. Approximately 60 percent of the U.S. Army's current stated medium truck requirements are still to be manufactured. This requirement, together with additional opportunities in relation to new vehicle programs – such as the Family of Medium Tactical Vehicles (FMTV), the Mine-Resistant Ambush Protected (MRAP) vehicle, and future prospects such as the Joint Light Tactical Vehicle (JLTV) – are expected to be valued at over $10 billion.
The proposed acquisition also creates a significant opportunity for growth in readiness and sustainment activity. Armor Holdings has an installed base of more than 30,000 tactical wheeled vehicles and is addressing potential requirements to produce up to 60,000 more over the next 10 years. Combined with BAE Systems’ existing installed base of approximately 88,000 vehicles worldwide, this acquisition enables Armor Holdings’ customers to benefit from enhanced logistics and support through integration with BAE Systems' well established reset, upgrade, and support capability.
