Chrysler Set to Acquire Gulfstream
The chairman of Gulfstream Aerospace said Tuesday that he expects final approval today of an agreement to sell the jet aircraft manufacturing company to Chrysler.
Allen Paulson, chairman and chief executive of the Savannah-based company, said the boards of directors of both companies are scheduled to meet separately today in New York. He said he anticipates that both boards will approve a final acquisition agreement.
Chrysler, the nation’s No. 3 auto maker, reported May 30 that it was negotiating to buy the company, which makes corporate aircraft, for $646 million. The auto maker said it intended to buy 100% of Gulfstream’s 34 million shares at $19 each.
Gulfstream would become a tiny part of Chrysler. The company’s 1984 sales were $600 million, or about 3% of the auto maker’s $19.5 billion.
Like its bigger competitors--General Motors and Ford--Chrysler has been looking for ways to diversify.
Attractive Backlog of Orders
GM recently purchased Hughes Aircraft for $5 billion, outbidding Ford in the process.
Gulfstream has an attractive backlog of orders for its executive jets, including the popular 13-passenger Gulfstream 3, automotive industry analysts said.
Paulson, who owns 71% of Gulfstream’s outstanding stock, said Chrysler initially approached him about buying 20% of Gulfstream’s stock. As talks continued, he said, Chrysler decided to try to acquire all of Gulfstream’s stock.
Chrysler Chairman Lee A. Iacocca has said he plans to operate Gulfstream as an independent subsidiary with Paulson at the helm.
The two are old friends.
Paulson bought Gulfstream from aviation giant Grumman Corp. in 1978 and built it into a leading manufacturer of corporate jets.
Paulson said the sale would be good for all Gulfstream employees because they would become part of a larger corporation with room to move up the corporate ladder.
If the acquisition agreement is approved, it must be reviewed by the Securities and Exchange Commission and other federal agencies before the deal becomes final, Paulson said.
Paulson also said that two domestic companies and three foreign companies are negotiating to buy Gulfstream’s Bethany, Okla., plant, which had manufactured Gulfstream’s Commander propjet aircraft.
Production was ended at the plant because of slow sales.
“Hopefully, we will have it sold in the next month or two,” Paulson said. Gulfstream had 37 unsold aircraft in its inventory at the end of 1984, he said, and that number has been reduced to about 10.
