PROVIDENCE, R.I. (AP) — Diversified conglomerate Textron Inc. said Monday it will purchase United Industrial Corp. in a move to expand its aerospace and defense business.
United Industrial's AAI Corp. unit, based in Hunt Valley, Md., makes aerospace and defense systems including unmanned aircraft and ground control stations and counter-sniper devices.
Textron owns Bell Helicopter and Cessna, and also makes golf carts, auto parts and surveillance systems.
Under the deal annjounced Monday, Textron said it will launch a cash tender offer of $81 a share for United Industrial stock as early as next week. The offer represents a 7.1 percent premium to United Industrial's Friday closing price of $75.62.
Based on United Industrial's 9.96 million shares outstanding at Aug. 2, the deal is valued at about $806.5 million. Including United Industrial stock expected to be issued to bondholders under terms of $120 million of 3.75 percent convertible senior notes issued in September 2004, the acquisition is valued at about $1.1 billion.
The boards of both companies have approved terms of the transaction.
In addition, two United Industrial directors, Warren G. Lichtenstein and Glenn M. Kassan, and Steel Partners II LP, an investment partnership controlled by Lichtenstein, which collectively own 2.01 million outstanding shares, have agreed to tender their shares in favor of the deal.
Subject to customary conditions and approvals, the company expects to complete the acquisition by the end of the year.
AAI also provides aircraft and satellite test equipment and training systems, and has a services and logistics business to support its customers.
AAI will become part of Textron's Bell segment, with most of the business operating within Textron Systems Corp., which makes precision weapons, surveillance systems, intelligence and communications systems, aircraft control systems, specialty marine craft and armored vehicles for the defense, homeland security and aerospace markets.
Projected revenue for AAI for this year is about $700 million. It has 2,500 employees worldwide.
Textron reported profit of $601 million on sales of $11.49 billion in fiscal 2006.