Italy's Finmeccanica has stolen a march on European aerospace rival EADS by agreeing to a major US defense acquisition. The rumoured deal to acquire defense electronics firm DRS Technologies was confirmed late on May 12. Finmeccanica will pay $5.2 billion, including $1.2 billion in debt, to acquire DRS. A briefing on the acquisition is scheduled for May 13 in London.
The offer of $81 a share represents a 32% premium over DRS' stock price. EADS has also expressed interest in the company, but has not indicated whether it would be prepared to make a counter-offer to DRS shareholders.
Finmeccanica, like EADS, is striving to emulate BAE Systems' success in the US defense market, a success largely built on several high-profile acquisitions of defense electronics and armoured vehicle firms. EADS has made a few niche deals, but the signature take-over that would put its nameplate over the door of a major US defense player has so far eluded the European aerospace giant.
New Jersey-headquartered DRS will operate as a wholly owned subsidiary of Finmeccanica, retaining its current management and with a US board, but it remains to be seen whether its take-over by a foreign-owned company will pass Pentagon and anti-trust reviews. DRS is no stranger to acquisitions - they have helped the company grow by almost 40% a year over the last five years - but until now it has been the buyer.