Under Schwartz, Loral Became Key Player
Lockheed Martin Corp.’s planned acquisition of Loral Corp. is a huge victory for 70-year-old Loral Chairman and Chief Executive Bernard Schwartz, who turned the once-tiny Loral into one of the world’s largest defense companies through a series of acquisitions.
The sale nets Schwartz almost $70 million for the 2% of Loral shares he owns, as well as additional shares of the Loral Space unit that he will continue to head.
And it gives Schwartz a seat on Lockheed’s board and allows the former accountant to continue to run Globalstar Telecommunications Ltd., a fledgling satellite operator he now chairs.
“After 23 years of building Loral, I feel a great satisfaction,” Schwartz said at a news conference Monday.
Schwartz made his own breaks. An unconventional outsider in the clubby defense industry, Schwartz, an opponent of the Vietnam War, bought defense businesses when nobody else wanted them.
“From being an outsider and not part of the old boys’ network, he has emerged as being the smartest in the industry,” said Lior Bregman, an Oppenheimer & Co. analyst. “It’s a major intellectual victory, as well as a financial victory.”
Schwartz took over Loral in 1972. The company at the time was a conglomerate, making copper wire, industrial meters and toys in addition to defense electronics systems.
The new boss wasted little time junking the non-defense businesses and focusing the company on radar systems. By developing such defense electronics, Loral assured itself a steady income even as defense budgets worldwide began to shrink.
Schwartz began what eventually became the acquisition of more than 80 companies, including the defense divisions of many industrial behemoths eager to exit the unpopular defense industry.
Loral acquired parts of Goodyear Tire & Rubber Corp., Ford Motor Co., International Business Machines Corp. and Xerox Corp.
Last March, Loral acquired Unisys Corp.’s defense business and IBM’s Bethseda, Md.-based Federal Systems Co. The latter $1.5-billion purchase was the largest in Loral’s history and added more than 7,000 people to its work force.
Schwartz knew every detail of the companies he bought, said Mark Altherr, a Salomon Brothers Inc. analyst. “He’s very focused.”
Schwartz knew when to buy. “He was always where the action was,” said Anthony Ginsberg, an analyst with Fourteen Research Corp. “If you look at the history of his business and his acquisitions, it was always where the business was moving.”
And now he knows when to sell. With a record wave of mergers and acquisitions sweeping defense and other U.S. industries, the price and the timing certainly were right.
