In late December 2007, BAE Systems signed a definitive agreement to sell its Surveillance and Attack business in Lansdale, PA to Cobham Defence Electronic Systems Corporation, for $240 million on a debt and cash free basis, payable on completion. The goodwill arising on completion is an allowable tax expense with an estimated net present value of $45 million, resulting in an effective price of $195 million. For the year ended Dec 31/06, BAE’s S&A division generated revenue of $91 million, and profits of $14 million, with gross assets of about $34 million as of Sept 30/07. The effective price represents a multiple of approximately 11.1x 2006 EBITDA.
The cash transaction was expected to close in the first quarter of 2008, following receipt of regulatory approvals. That has now happened.