Marietta May Buy Unit From Major Rival : Aerospace: The firm is reportedly talking with General Dynamics about purchasing San Diego-based rocket division.
General Dynamics Corp. is negotiating to sell its San Diego-based rocket-building division to one of its major rivals, Martin Marietta Corp., industry sources said Friday.
Martin Marietta builds the large-scale Titan family of space-launch rockets, and it would be able to extend its product line by acquiring General Dynamics’ Space Systems division, which makes the smaller Atlas booster and Centaur upper-stage rockets.
The division employs 3,900 people, including 2,600 in San Diego.
Spokesmen for both companies declined to comment on the talks--first reported by the newsletter Aerospace Daily--and there was no immediate indication of what price the General Dynamics unit might fetch.
But one investment source told The Times that the companies “have been working on it a long time” and are hoping “to get it done by year-end. Everybody knows that they are supposed to get together, and everybody knows that Martin is a willing buyer and GD is a willing seller.”
Amid the reports, General Dynamics’ stock gained $1.50 a share Friday to $97.75, and Martin Marietta closed unchanged at $45.25 a share, both in New York Stock Exchange composite trading.
The talks did not surprise analysts, who noted that the worldwide rocket industry for commercial and military spacecraft is ripe for consolidation.
“There is a lot of capacity, and it’s become a very competitive business,” said John Harbison, aerospace director for the consulting firm Booz Allen & Hamilton in Los Angeles.
Indeed, General Dynamics’ space division three months ago eliminated 300 jobs, and froze or reduced pay for salaried workers in response to weaker market conditions. In 1992, the division had an operating loss of $41 million on sales of $490 million, which accounted for 14% of General Dynamics’ $3.5 billion in total sales. (That excludes sales of its F-16 fighter jet division, which was sold to Lockheed Corp. in March.)
If a deal takes place, it would be another major divestiture for General Dynamics, based in Falls Church, Va., and another major purchase for Bethesda, Md.-based Martin Marietta.
In response to shrinking defense budgets, General Dynamics has been aggressively shedding assets. Besides the sale to Lockheed, General Dynamics sold its missile systems group and Cessna Aircraft units.
Martin Marietta, meanwhile, has been buying assets, and last year it purchased General Electric Co.’s aerospace division for $3 billion. That has proved a mixed blessing recently because of several problem-plagued missions involving GE-built spacecraft.
Nonetheless, Harbison said Martin Marietta has good reason to acquire a line of smaller rockets, because there is a trend toward building lighter satellites.
Last week, Martin Marietta said that in addition to the 9,000 jobs it is eliminating this year, it will cut 2,000 more jobs and close 10 U.S. plants by the end of 1994.
