BAE Buys Bradley’s Builder for $4B

Bradley Becomes British

British defense contractor BAE Systems PLC has agreed to buy U.S. rival United Defense Industries (UDI), subject to approval. The transaction was conducted through its subsidiary BAE Systems North America Inc., which entered into a definitive merger agreement to acquire the net debt and fully diluted share capital of United Defense for $75 per share in cash, or some $3.97 billion total. The acquisition is subject to both regulatory and shareholder approval.

BAE said the move would help it benefit from increased U.S. government spending on military operations in Iraq and Afghanistan. Analysts also point to UDI’s lineup of armored vehicles, which is not a comparable strength at BAE. UDI’s munitions, missiles, and naval systems, meanwhile, will enhance BAE’s strong portfolio in both of those areas.

UDI employs around 8,000 people at 25 sites in the United States and Sweden, and generated sales of US$2.29 billion in FY04. Headquartered in Arlington, VA, UDI products include the Bradley AFV, M-109 Paladin self-propelled howitzer, and the USMC’s Amphibious Assault Vehicle. The Swedish firm BOFORS is a subsidiary, and UDI also develops other combat vehicles, artillery systems, naval guns, missile launchers and precision munitions.

UDI should not be confused with the far larger conglomerate United Defense Technologies, which boasts such firms as Sikorsky, Lockheed, and General Dynamics among its subsidiaries.