General Dynamics Bid Under Review

A Pentagon review of General Dynamics Corp.’s $2-billion unsolicited bid for rival Newport News Shipbuilding Inc. may be made public sometime this week, sources have told the Washington Post.

The Defense Department is still analyzing whether to recommend that Defense Secretary William S. Cohen approve the bid, Defense spokesman Glenn Flood said. The merger offer must be approved by the departments of Defense and Justice, as well as Newport News’ board and shareholders.

Flood’s comments followed a statement Sen. John W. Warner (R-Va.) made over the weekend that approval of the deal was looking “less likely.”

A spokesman for Warner, chairman of the Armed Services Committee and an opponent of the takeover, said the senator believes “the case against it is getting stronger every day.” He would not elaborate, and another press aide said Warner would not be commenting further.

The acquisition of the Newport News, Va.-based firm by General Dynamics, which is based in Falls Church, Va., would put about 70% of the Navy’s shipbuilding budget under one corporate roof.

The Justice Department is also studying the deal, though the Defense Department review began first.

Both of Virginia’s senators have publicly opposed the deal, saying it would concentrate too much power in one company. They may also be worried about losing shipbuilding jobs in Virginia, sources said.

The AFL-CIO also has come out in opposition to the merger, fearing its possible effect on jobs in the unionized industry.