budanski
03-11-2004, 11:14 PM
General Dynamics to Buy Britain's Alvis*
Wired (http://wireservice.wired.com/wired/story.asp?section=Breaking&storyId=833588)
Thursday, March 11, 2004 1:49 p.m. ET
By Daniel Morrissey
LONDON (*******) - U.S. defense contractor General Dynamics Corp. <GD.N> on Thursday said it would buy Alvis Plc <ALV.L>, its only U.K. rival in the tank business, for about $562 million to add to its armored vehicle lineup and strengthen its foothold in European markets.
But the 309 million British pound deal could still prove sticky as analysts expect the takeover to meet resistance from Britain's biggest military contractor, BAE Systems <BA.L>, which holds nearly 29 percent of Alvis.
BAE said it was reviewing its options, and would not comment further. But analysts said General Dynamics, maker of the Abrams main battlefield tank, does not necessarily need to control 100 percent of Alvis, maker of the Vickers Challenger tank used by British armed forces.
"While GD has made a bid for all outstanding shares of Alvis, it would settle for a 51 percent controlling stake," JP Morgan analyst Joe Nadol wrote in a research note. "This could potentially result in a joint venture between General Dynamics and BAE Systems."
Alvis started as a car manufacturer in 1919 and it now has operations in the UK, Scandinavia and South Africa. Apart from tanks, Alvis makes armored infantry fighting vehicles, and armored personnel carriers.
Terms of the deal call for Falls Church, Virginia-based General Dynamics to pay 280 pence per share in cash for Alvis, a premium of about 33 percent on Alvis's closing share price on Wednesday. Its stock above the offer price to close Thursday at 288 pence in London Stock Exchange trading. Earlier it traded as high as 299 pence, the highest in at least 11 years.
Shares of BAE fell more than 5 percent to 189 pence, and in New York Stock Exchange trading, General Dynamics shares were up 76 cents at $88.07.
GD COULD GAIN EDGE IN UK ARMORED VEHICLE PROJECT
Analysts said BAE acquired the Alvis stake with hopes of securing a key role in a new three-billion-pound U.K. armored vehicles project called Future Rapid Effects System (FRES).
But General Dynamics' bid could make the U.S. company the lead armored vehicle producer in the U.K. and threaten BAE's role in the FRES project, according to Numis Securities analyst Clive Forestier-Walker.
General Dynamics, which also makes submarines, guns and battlefield communications systems, said Alvis had complementary technology and the acquisition would add to its earnings. The acquisition of Alvis would expand the company's European armored vehicle business.
The deal would cap a series of European investments by General Dynamics, which last October set up General Dynamics European Land Combat Systems based in Vienna and comprises Steyr Spezialfahrzeug of Austria, MOWAG AG of Switzerland and General Dynamics Santa Barbara Sistemas in Spain.
POLITICAL APPROVALS
The takeover bid comes at a time when European industry executives and politicians have expressed fears of U.S. domination, fueled by rising U.S. defense spending, which at over $200 billion a year dwarfs what Europe spends collectively.
But General Dynamics U.K. Managing Director Larry Johnson said he did not expect the British government to block the deal and there were no plans to make changes to Alvis products such as the Vickers Challenger tank, which competes with the Abrams in export markets.
Alvis Chief Executive Nicholas Prest said he did not expect the deal to face hurdles over concerns the company would be too dominant in the combat vehicle market in Europe.
Prest noted Germany's Rheinmetall <RHMGP.DE> and others build such equipment and there was no overlap with General Dynamics in Britain and Sweden, where Alvis is also active.
General Dynamics' offer came as Alvis reported a forecast-beating 20 percent rise in underlying pretax profit to 19.8 million pounds for 2003 and said it had a record order book. Turnover jumped 55 percent to 349 million pounds. (Additional reporting by Jason Neely in London and Jui Chakravorty in New York)
Copyright © 2003 ******* Limited.
Good news for Operation Ivy :D
Wired (http://wireservice.wired.com/wired/story.asp?section=Breaking&storyId=833588)
Thursday, March 11, 2004 1:49 p.m. ET
By Daniel Morrissey
LONDON (*******) - U.S. defense contractor General Dynamics Corp. <GD.N> on Thursday said it would buy Alvis Plc <ALV.L>, its only U.K. rival in the tank business, for about $562 million to add to its armored vehicle lineup and strengthen its foothold in European markets.
But the 309 million British pound deal could still prove sticky as analysts expect the takeover to meet resistance from Britain's biggest military contractor, BAE Systems <BA.L>, which holds nearly 29 percent of Alvis.
BAE said it was reviewing its options, and would not comment further. But analysts said General Dynamics, maker of the Abrams main battlefield tank, does not necessarily need to control 100 percent of Alvis, maker of the Vickers Challenger tank used by British armed forces.
"While GD has made a bid for all outstanding shares of Alvis, it would settle for a 51 percent controlling stake," JP Morgan analyst Joe Nadol wrote in a research note. "This could potentially result in a joint venture between General Dynamics and BAE Systems."
Alvis started as a car manufacturer in 1919 and it now has operations in the UK, Scandinavia and South Africa. Apart from tanks, Alvis makes armored infantry fighting vehicles, and armored personnel carriers.
Terms of the deal call for Falls Church, Virginia-based General Dynamics to pay 280 pence per share in cash for Alvis, a premium of about 33 percent on Alvis's closing share price on Wednesday. Its stock above the offer price to close Thursday at 288 pence in London Stock Exchange trading. Earlier it traded as high as 299 pence, the highest in at least 11 years.
Shares of BAE fell more than 5 percent to 189 pence, and in New York Stock Exchange trading, General Dynamics shares were up 76 cents at $88.07.
GD COULD GAIN EDGE IN UK ARMORED VEHICLE PROJECT
Analysts said BAE acquired the Alvis stake with hopes of securing a key role in a new three-billion-pound U.K. armored vehicles project called Future Rapid Effects System (FRES).
But General Dynamics' bid could make the U.S. company the lead armored vehicle producer in the U.K. and threaten BAE's role in the FRES project, according to Numis Securities analyst Clive Forestier-Walker.
General Dynamics, which also makes submarines, guns and battlefield communications systems, said Alvis had complementary technology and the acquisition would add to its earnings. The acquisition of Alvis would expand the company's European armored vehicle business.
The deal would cap a series of European investments by General Dynamics, which last October set up General Dynamics European Land Combat Systems based in Vienna and comprises Steyr Spezialfahrzeug of Austria, MOWAG AG of Switzerland and General Dynamics Santa Barbara Sistemas in Spain.
POLITICAL APPROVALS
The takeover bid comes at a time when European industry executives and politicians have expressed fears of U.S. domination, fueled by rising U.S. defense spending, which at over $200 billion a year dwarfs what Europe spends collectively.
But General Dynamics U.K. Managing Director Larry Johnson said he did not expect the British government to block the deal and there were no plans to make changes to Alvis products such as the Vickers Challenger tank, which competes with the Abrams in export markets.
Alvis Chief Executive Nicholas Prest said he did not expect the deal to face hurdles over concerns the company would be too dominant in the combat vehicle market in Europe.
Prest noted Germany's Rheinmetall <RHMGP.DE> and others build such equipment and there was no overlap with General Dynamics in Britain and Sweden, where Alvis is also active.
General Dynamics' offer came as Alvis reported a forecast-beating 20 percent rise in underlying pretax profit to 19.8 million pounds for 2003 and said it had a record order book. Turnover jumped 55 percent to 349 million pounds. (Additional reporting by Jason Neely in London and Jui Chakravorty in New York)
Copyright © 2003 ******* Limited.
Good news for Operation Ivy :D