When BAE Systems divested itself of its 20% stake in Airbus, many observers wondered where the money would go. CEO Michael Turner’s statement that: “We believe that now is the right time for us to divest our Airbus shareholding to… concentrate on our core transatlantic defence and aerospace strategy” left much to the imagination. An aircraft life-cycle maintenance play? A key components & electronics supplier like DRS or Honeywell? An armored vehicle firm like Force Protection to enhance the position it had built through its $4 billion acquisition of United Defense LP?
It would appear that BAE will use the equivalent of its entire $2.3 billion (EUR 1.7 billion net) Airbus proceeds, and more besides, to acquire Armor Holdings of Jacksonville, FL. The deal will be a one-step merger at a price per common share of $88.00, a 7% premium over Armor holdings’ May 4th closing price of $82.15. Including the assumption of net debt of $388 million, the transaction is valued at $4.53 billion.