Bidding War Heats Up for LTV Aerospace Unit
The bidding war for LTV’s aerospace business heated up Wednesday as Thomson-CSF, Carlyle Group and surprise entrant Hughes Aircraft said they would pay $400 million for the unit--$45 million more than offered previously by defense giants Lockheed and Martin Marietta.
Besides the rising cash figures, the temperature of the rhetoric rose Wednesday over the possibility that Thomson, backed by the French government, could control a major U.S. defense firm.
Proponents of the Thomson bid asserted that Martin and Lockheed were playing on “xenophobic fears in Congress,” while Martin and Lockheed proponents said it was clear that Thomson wanted to gain unauthorized access to U.S. aerospace technology.
After Thomson entered its bid in U.S. Bankruptcy Court in New York, Judge Burton Lifland adjourned the sale hearing until next Wednesday to allow creditors to review the new offer. He had been expected to make the decision Wednesday.
The bid submitted by the Thomson group was actually two separate bids, in which Thomson would pay $280 million for LTV’s missile division. If successful, it would sell 15% of the stake to Hughes Aircraft Co.
Explaining Hughes’ role, company spokesman Richard Dore said: “It is unrealistic to think we can only focus on the U.S. defense market. We see this as a chance to increase our worldwide business.” Dore noted that Thomson and LTV are already members of a Hughes team developing a “Star Wars” defensive missile in Canoga Park.
Hughes Chairman Malcolm Currie would serve as a director on a special security committee of the board to ensure that no technology is improperly transferred to France, Bell said. Meanwhile, the Carlyle Group, a Washington investment firm, would pay $120 million for LTV’s aircraft structures business, which builds parts of the B-2 bomber, the C-17 cargo jet and various Boeing commercial aircraft.
Jim Bell, president of Thomson’s U.S. subsidiary, said Thomson upped the bidding substantially to override political concerns erupting in Congress over foreign ownership. He also disparaged the Lockheed and Martin political efforts, which have led to 30 senators signing a letter of concern to President Bush.
“It is not hard to get a senator or a congressman to sign a letter, particularly if you are a Martin Marietta or a Lockheed and you have all the political action funds behind you,” Bell said.
Bell added that Pentagon leaders are comfortable with Thomson ownership and that the firm intends to retain the current management and labor force.
But Lockheed and Martin forces countered that Thomson’s bid is far higher than any U.S. defense firm could justify, raising questions of whether it will ship sensitive U.S. technology to France.
Neither Lockheed nor Martin Marietta would say whether they planned to raise their bid.
