General Dynamics Buys Jet Maker
SAVANNAH, Ga. (AP) _ Defense giant General Dynamics will buy Gulfstream Aerospace Corp., a maker of business jets, for $5.3 billion.
The deal allows General Dynamics, based in Falls Church, Va., to expand beyond its core defense contracting business. The company was blocked last month in a bid to acquire Newport News Shipbuilding Inc. after the Pentagon cited concerns about its dominance in the field.
In its new deal, General Dynamics will pay $71.44 per share of Gulfstream. Savannah-based Gulfstream controls about 60 percent of the world market for business jets, popular among corporate executives and celebrities.
Nicholas D. Chabraja, General Dynamics’ chairman and chief executive officer, said Gulfstream will have an immediate and positive impact on General Dynamics’ profits.
``Its lean management structure and focus on operating excellence and customer satisfaction make it a strong cultural fit with General Dynamics,″ he said.
Gulfstream was founded in 1978 by Allen E. Paulson from properties that were previously owned by Grumman Corp. He sold it to Chrysler Corp. in 1985, but teamed with the New York-based investment firm, Forstmann Little & Co., to buy it back in 1990 for $825 million.
Forstmann Little took the company public in 1996 but still owns 23 percent of its stock. Paulson is a director.
The proposed acquisition is subject to shareholder and regulatory approval. It is expected to be completed in the third quarter of 1999.
Gulfstream had 1998 revenues of $2.4 billion and earnings of $225.3 million. It employs 3,200 people at its plant at Savannah International Airport.
General Dynamics has 29,000 employees and had 1998 sales of $5 billion.