Loral to Sell 49% Interest in Ford Aerospace Unit : Asset sale: Three European companies are to pay $182 million for the Space Systems Division of Palo Alto.
Loral Corp. said Monday that it plans to sell a 49% interest in Ford Aerospace Corp.’s satellite division to three European companies for $182 million.
Loral, a New York-based defense electronics concern, will sell the minority interest in the Palo Alto-based Space Systems Division to Aerospatiale Societe Nationale Industrielle of France, Alcatel N.V. of Belgium and Selenia Spazio S.p.A. of Italy.
The sale is the second major asset of Ford Aerospace to be fully or partly sold by Loral, which is expected to complete its $715-million acquisition of the Newport Beach-based aerospace and defense company later this week. In September, Loral sold Ford’s BDM International defense consulting subsidiary to the Carlyle Group, a Washington, D.C., merchant banking firm, for $130 million.
The Space Systems deal would create one of the world’s largest commercial satellite businesses; combined revenue from satellite operations among the companies would be $1.3 billion. Two other satellite manufacturers--Hughes Aircraft Co. and General Electric Corp.--would still be larger.
Although some analysts have speculated that Loral will sell the Ford Aerospace Aeronutronic division in Newport Beach, Loral spokeswoman Elizabeth Allen said the company has no plans to divest other Ford units.
After the company agreed to buy Ford Aerospace in July, Loral Chairman Bernard Schwartz said the company would not sell off operations piecemeal. But Loral officials said the company decided, after reviewing Ford Aerospace operations, that BDM and the equity interest in the satellite unit would be exceptions.
Loral Aerospace Holdings Inc. will own 51% of Space Systems/Loral and have management responsibility for the division, which employs 1,850 people in Palo Alto. The sale teams Loral with two companies--Alcatel and Aerospatiale--that had earlier bid to buy all of Ford Aerospace.
John Egan, a space industry consultant in Washington, D.C., said Loral probably decided to form the satellite partnership to help reduce debt incurred in the Ford Aerospace acquisition and to strengthen its position worldwide in the increasingly competitive satellite business.
“A number of their contracts have involved joint-venture work with overseas companies,” Egan said. “With this sale, Loral has institutionalized that practice.”
Ford Aerospace’s space-related businesses in Sunnyvale and Houston, which perform work mostly for the National Aeronautics and Space Administration and the Defense Department, are not included in the transaction.
The space systems deal is subject to the signing of a final agreement and to various government approvals, both of which Loral said it expects by the year’s end. With the sale of equity in the satellite unit, Loral will have generated more than $310 million from the sale of Ford assets.
Among the space unit’s biggest contracts is one for the development of a next-generation weather satellite, known as Geostationery Operational Environmental Satellite (GOES), for the National Weather Service. The program has experienced technical difficulties that have delayed launches of the much-needed weather forecasting system.
The division also manufactures the Superbird and Intelsat-VII telecommunications satellites.
FORD’S SPACE SYSTEMS DIVISION
LOCATION: Palo Alto
PARENT: Ford Aerospace Corp.
BUSINESSES: Telecommunications and weather satellite manufacturing
TOP EXECUTIVE: Robert Berry, president
EMPLOYEES: 1,854
MAJOR CONTRACTS: Geostationary Operational Environmental Satellite weather satellite system; Superbird series of domestic telecommunications satellites; Insat-ID telecommunications. satellite for the Indian government.
MAJOR COMPETITORS: Hughes Aircraft, General Electric Co.
REVENUES: Estimated to be $350 million in 1990, compared to $302 million last year
RECENT DEVELOPMENTS: Loral Corp., which is buying Ford Aerospace, agreed to sell a 49% interest in the Space Systems Division to Aerospatiale Societe Nationale Industrielle of France, Alcatel N.V. of Belgium, and Selenia Spazio S.p.A. of Italy for $182 million.
Source: Ford Aerospace Corp.
