Carlyle Group to Acquire General Dynamics Unit
General Dynamics announced Monday that it was selling its San Diego-based electronics division to Carlyle Group, a Washington merchant bank. Both buyer and seller said the division and its 2,000 local employees would remain in San Diego and that no layoffs are planned.
Neither General Dynamics nor Carlyle would disclose the sale price. But sources close to the transaction valued the deal at less than $100 million.
One securities analyst, Jerry Cantwell of Wertheim Schroder of New York, said informed sources told him that the price was “about $50 million.”
The sale, which won’t be final until December, is the third major San Diego operation that General Dynamics has sold in the last year.
In August, General Dynamics sold its missiles division to Hughes Aircraft Co. for $450 million. Of the unit’s 2,500 San Diego workers, about 1,300 will lose their jobs soon because of program cuts. Most, if not all, of the remaining 1,200 workers will be laid off when Hughes moves the operation to Tucson by next April.
In September, 1991, Computer Sciences Corp. bought General Dynamics’ data systems unit for $200 million. None of the unit’s 1,200 workers were laid off.
The electronics division, which will be renamed GDE Systems, makes mainly avionics test equipment used by the Air Force to test a variety of aircraft, including the F-16 jet fighter. In a press briefing Monday, new Chief Executive Terry Straeter said the company controls about 60% of the $500-million market for Air Force test equipment.
Carlyle’s principals include former U.S. Defense Secretary Frank C. Carlucci and Fred Malek, a close political associate of President Bush. Much of the firm’s capital was put up initially by Richard K. Mellon. The sale to Carlyle had been rumored for the last month.
