Team Infidel
Forum Spin Doctor
Financial Times
May 9, 2008 By Sylvia Pfeifer, in London
Finmeccanica, the Italian defence and aerospace group, is poised to secure a major foothold in the US market with the acquisition of a key supplier to the American military.
The group is in advanced talks to buy DRS Technologies, which makes engineering and electronics products for the military and intelligence agencies in the US.
In a statement, DRS confirmed that "it is engaged in discussions contemplating a potential strategic transaction involving the company".
Finmeccanica declined to comment. Sources close to the talks confirmed they had been under way for several months and that a deal could be announced as early as next week. If agreed, it would be the largest US defence acquisition by a continental European group and mark a big strategic step for Finmeccanica.
While British defence companies, including BAE Systems and Cobham, have led the charge over the past few years, their continental European peers have been somewhat slower off the mark.
BAE has so far been the most aggressive, buying armoured vehicle maker United Defense Industries for $4.2bn in 2005 and truck maker Armor Holdings for $4.1bn last year.
EADS, the European aerospace and defence group, has made three acquisitions in the US in past years, but none of them was a big defence deal nor of the scale of DRS. France's Thales also has a presence in the US market.
Finmeccanica has made no secret of its desire to grow in the lucrative US defence market. It has already made significant inroads into the US, winning a number of high-profile contracts with the Pentagon and Boeing.
Its AgustaWestland unit is building the next US presidential helicopter fleet in conjunction with Lockheed Martin.
Pier Francesco Guarguaglini, Finmeccanica chairman and chief executive, has indicated that the company could spend between €2bn ($3bn) and €3bn on acquisitions, partly from a residual stake in ST Microelectronics, Europe's largest chipmaker, and partly through long- and short-term debt.
In spite of Finmeccanica's strong ties with the Pentagon, the acquisition of DRS could be a key test for US security regulators, given that the Italian government still holds a 34 per cent stake in the defence group.
Founded in 1968, DRS makes products such as sensors, power generators and computer systems.
It is a key supplier to the US military. It has grown through dozens of acquisitions and had revenues of $2.82bn last year.
Shares in DRS jumped 13 per cent in early-morning trading in New York yesterday, giving it a market valuation of just over $3bn.
May 9, 2008 By Sylvia Pfeifer, in London
Finmeccanica, the Italian defence and aerospace group, is poised to secure a major foothold in the US market with the acquisition of a key supplier to the American military.
The group is in advanced talks to buy DRS Technologies, which makes engineering and electronics products for the military and intelligence agencies in the US.
In a statement, DRS confirmed that "it is engaged in discussions contemplating a potential strategic transaction involving the company".
Finmeccanica declined to comment. Sources close to the talks confirmed they had been under way for several months and that a deal could be announced as early as next week. If agreed, it would be the largest US defence acquisition by a continental European group and mark a big strategic step for Finmeccanica.
While British defence companies, including BAE Systems and Cobham, have led the charge over the past few years, their continental European peers have been somewhat slower off the mark.
BAE has so far been the most aggressive, buying armoured vehicle maker United Defense Industries for $4.2bn in 2005 and truck maker Armor Holdings for $4.1bn last year.
EADS, the European aerospace and defence group, has made three acquisitions in the US in past years, but none of them was a big defence deal nor of the scale of DRS. France's Thales also has a presence in the US market.
Finmeccanica has made no secret of its desire to grow in the lucrative US defence market. It has already made significant inroads into the US, winning a number of high-profile contracts with the Pentagon and Boeing.
Its AgustaWestland unit is building the next US presidential helicopter fleet in conjunction with Lockheed Martin.
Pier Francesco Guarguaglini, Finmeccanica chairman and chief executive, has indicated that the company could spend between €2bn ($3bn) and €3bn on acquisitions, partly from a residual stake in ST Microelectronics, Europe's largest chipmaker, and partly through long- and short-term debt.
In spite of Finmeccanica's strong ties with the Pentagon, the acquisition of DRS could be a key test for US security regulators, given that the Italian government still holds a 34 per cent stake in the defence group.
Founded in 1968, DRS makes products such as sensors, power generators and computer systems.
It is a key supplier to the US military. It has grown through dozens of acquisitions and had revenues of $2.82bn last year.
Shares in DRS jumped 13 per cent in early-morning trading in New York yesterday, giving it a market valuation of just over $3bn.