Northrop Grumman to acquire Vought for $130 million

Defense Daily, July 13, 1994

Northrop Grumman late yesterday announced plans to acquire Vought Aircraft Company from the Carlyle Group for $130 million in cash.

Northrop Grumman said it reached the agreement now to acquire Carlyle's 51 percent interest in Vought so it could coordinate the integration of Vought's aerostructure activities with its plans to integrate with Grumman, which Northrop recently acquired.

Under an earlier agreement with Carlyle, Northrop had planned to acquire Vought during a three-year period beginning in September 1995.

Northrop Grumman now owns a 49 percent interest in Vought.

Carlyle's Managing Director William Conway noted that Carlyle and its investors will have earned a compound annual return of about 90 percent on the sale of Vought, taking into account dividends received and the sale price. "Our purchase and subsequent sale of Vought validates our strategy of acquiring undervalued aerospace and defense companies and then working closely with outstanding management to enhance the value even further," Conway said.

Northrop Grumman chief Kent Kresa said Vought has done an excellent job in streamlining its operations. The buy will add to Northrop's earnings immediately after the transaction is closed, he said. Vought is free of debt and has about $90 million in excess cash.

Northrop Grumman expects 1994 sales of $6.4 billion prior to acquisition of Vought, down from the $7 billion in sales it expected before acquiring Grumman. Vought is expected to have 1994 sales of about $800 million.

Vought's sales in future years are "expected to be in the $500 million to $600 million range, largely due to the substantial completion of Vought's work on the current B-2 production program and planned reductions in its commercial aerostructures business," Northrop Grumman said.

Vought manufactures major subassemblies for the Boeing 747, 757 and 767 airliners, the C-17 airlifter, the Gulfstream V business jet, and Canadair regional jets.

Northrop Grumman's acquisition of Vought will give it ownership of three of seven entrants in the Air Force-Navy Joint Primary Aircraft Training System competition. Vought is offering its Pampa 2000 trainer in the JPATS competition.