US Control Systems Business Acquired

British Aerospace PLC 27 April 2000 BAE SYSTEMS ACQUIRES US CONTROL SYSTEMS BUSINESS British Aerospace plc (BAE SYSTEMS) has agreed to acquire the Lockheed Martin Control Systems business for $510m. The acquisition, which will be funded from existing cash resources, will complement BAE SYSTEMS' established electronic systems and flight controls systems businesses. Control Systems has particular strengths in full-authority digital engine controls (FADEC) and digital fly-by-wire flight controls with a broad range of programme applications. The acquisition will enhance BAE SYSTEMS' existing capability in aircraft flight controls and will deliver greater value to its customers. The addition of the Control Systems business will also broaden BAE SYSTEMS' backbone controls technology into the commercial full-authority digital engine control product arena and improve BAE SYSTEMS' engineering base, heightening its core competencies in the design and production of leading-edge control systems. The Control Systems business had net assets of $64m as at 31 December 1999. In the year ended 31 December 1999 the business produced profit before interest and tax of $42m on sales of $359m. The acquisition is expected to be slightly earnings enhancing in the current year before amortisation of goodwill. Completion is conditional on receiving the necessary regulatory clearances and is expected to take place in the next few months. Control Systems designs, develops and produces full-authority digital engine controls (FADEC) for aircraft gas turbine engines as well as digital fly-by-wire flight control systems, vehicle management systems and other related airborne electronic systems. Major platforms served are the F-18, C-17, V-22 and the A-10. It also designs and manufactures space launch vehicle control systems and vehicle power drives. Control Systems employs some 1,750 people in the USA at Johnson City, New York and Fort Wayne, Indiana. John Weston, Chief Executive of BAE SYSTEMS said: 'This acquisition further strengthens our growing presence in North America. It complements well our existing electronic control activities and extends the broad base of programmes in which we are involved. This is consistent with our overall strategic intent of being the benchmark global systems, defence and aerospace company.' BAE SYSTEMS has its head office at Farnborough in the UK. The company has significant operations in the United States and, with this acquisition, will employ over 20,000 people in North America in the design, development and manufacture of a wide range of aerospace products and intelligent electronic systems for Government and commercial customers. BAE SYSTEMS activities in North America include information systems such as mission management and strategic planning systems; communications and data links; combat systems; avionics and navigation systems for civil and military use. 27 April 2000

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