U.S., French Partners Bid on LTV Unit : Defense: The offer for the Dallas firm’s aerospace division is higher than Martin Marietta and Lockheed’s $350-million proposal, industry sources say.
Carlyle Group, a Washington-based investment firm, and French defense giant Thomson-CSF have made a joint bid for bankrupt LTV Corp.’s aerospace operations that exceeds the $350-million deal proposed by Martin Marietta Corp. and Calabasas-based Lockheed Corp., industry sources said Sunday.
Dallas-based LTV, mired in a Chapter 11 reorganization since 1986, must sell its aerospace business to pay off creditors. The operation, with annual revenue of about $2 billion, has an aircraft components division and a profitable missile business.
Details of the Thomson-Carlyle proposal were unavailable, but a source close to the deal said it surpassed $350 million. An LTV spokesman declined to comment. Carlyle Group officials did not return calls.
Thomson previously bid $230 million for the missile business alone, but LTV and investment bankers rejected it. Thomson later aligned with Carlyle for the new bid.
Lawyers in the case were informed of the Carlyle-Thomson offer Wednesday at a closed meeting in the chambers of Judge Burton Lifland, who is presiding over the LTV bankruptcy case in U.S. Bankruptcy Court in New York.
Several other aerospace firms are interested in the LTV unit. Their bids have not been disclosed.
LTV makes portions of the B-2 bomber as well as an air defense missile for France that rivals other U.S. systems. Some industry experts suggested that U.S. firms want to block Europeans from gaining a stronger position in the emerging air defense market.
According to an LTV spokesman, the aerospace operation makes a multiple-launch rocket system and a ground-to-ground missile system. It also is developing antitank weapons as well as an antiaircraft and antimissile defense system akin to the Patriot system that was used in the Persian Gulf War, LTV said.
The LTV sale would require Pentagon approval, raising possible questions about foreign ownership. Former Defense Secretary Frank C. Carlucci, vice chairman of Carlyle Group, could be helpful in allaying those concerns.
Recent acquisitions of defense firms by foreign companies have been approved through the use of “special security arrangements,” in which designated board members ensure that no classified data is transferred to the foreign owner.
Carlyle Group has been active in acquiring defense units, both with its own investors and outside partners. The group, which arranges such deals with financing from its own investors and outsiders, typically enters ventures with partners who have the expertise and long-term commitment to run the targeted business.
Last year, Carlyle Group acquired BDM International Inc., which provides computer and management services to the government and counts the Pentagon as its biggest customer.
