Ford Aerospace Executives to Meet, May Discuss Sale
Top executives at Ford Aerospace are meeting today at company headquarters here, and President Donald Rassier is expected to discuss the company’s possible sale--in whole or part--by parent Ford Motor Co.
Company sources said the early morning meeting will include all the top executives of the defense and space company, and officials--including Rassier--will then fly to the Bay Area to meet with managers at the firm’s facilities in the Silicon Valley.
Word of the possible sale of the company began to emerge in late December, and reports last week indicated that a final decision would be made by Ford directors at a board meeting Thursday.
The company has declined to comment on the reports, and no announcement was made after the board meeting. Ford’s stock climbed 50 cents to $45 in trading on the New York Stock Exchange.
Ford Aerospace has revenue of about $2 billion and says it is profitable, though Ford does not provide financial information about the subsidiary. The Aeronutronics division in Newport Beach manufactures tactical weapons systems, including the Sidewinder and Chapparal heat-seeking missiles, and employs 2,700 people.
Pentagon budget cuts are expected to result in hard times for many defense contractors, and analysts say Ford is eager to marshal its resources in the face of intensifying international competition in the automobile business.
Chrysler announced recently that it would sell its defense operations, although General Motors has said it has no intention of shedding its huge Hughes Aircraft unit.
Wolfgang Demisch, a defense analyst at UBS Securities, said “it would be logical” for Ford to sell its defense business, noting that the firm had made a major commitment in buying Jaguar and was generally facing a tough auto market.
But analysts note that it might be difficult to sell a defense business in the current climate: “Who would want to buy them? Who would want to buy any defense contractor now?” asked Michael Beltramo, a Los Angeles defense consultant.
Analysts speculate that Ford Aerospace might fetch anywhere from $1.5 billion to $2 billion, and the companies commonly cited as possible buyers include Boeing, Martin Marietta, TRW, Rockwell, Hughes and Lockheed. Foreign firms, especially Alcatel of France, might also be interested, though they could run into political problems because 70% of Ford Aerospace’s business is with the U.S. military.
Ford might also choose to sell some segments of the business on its own, or spin parts of the unit off to management or shareholders, analysts said.
In addition to the weapons division based here, Ford Aerospace has satellite manufacturing, ground systems, and satellite tracking and control operations in Palo Alto and Sunnyvale. It also does engineering and support work for the NASA space center in Houston, and manages training ranges for the military out of its technical support division in Pennsylvania.
In 1988, Ford Aerospace bought BDM Inc., a Washington-area defense consulting and engineering organization, for $425 million in what some had believed was an indication of renewed commitment to the defense business.
Some analysts suggest that a buyer might keep some pieces of the business and sell others, because the divisions operate on an independent basis. Lawrence M. Harris of the investment firm Bateman, Eichler, Hill Richards in Los Angeles called the satellite operation a “crown jewel” that might attract broad interest.
The company’s 100 acres of land in Newport Beach, held on a lease from the Irvine Co. that runs through 2045, might also be attractive to a buyer looking to break up the firm.
