Northrop to Buy Cal Micro Unit
Northrop Grumman Corp., the fourth-largest player in the rapidly consolidating aerospace industry, has agreed to buy the defense business of California Microwave Inc. for $93 million, the companies said Thursday.
The purchase price for California Microwave’s information systems division could increase by up to $5 million if certain revenue goals are met next year, the companies said. The transaction is subject to standard governmental and regulatory review and is expected to close in April.
Sunnyvale-based California Microwave, which makes equipment for satellite and wireless communications systems, said it expects a net gain of $38 million from the sale.
The information systems unit is expected to record sales of about $95 million in 1999. It specializes in airborne reconnaissance and surveillance systems, ground-based satellite communications systems and mission-planning systems.
Shares of Los Angeles-based Northrop rose 19 cents to close at $61 on the New York Stock Exchange, while California Microwave rose 94 cents to close at $10.50 on Nasdaq.
Customers of the unit include the U.S. armed services and other government agencies.
“This acquisition is highly complementary to the strategic transformation of our company that we have accomplished during the 1990s to focus our business activities and technologies in the high-growth areas of electronics, systems integration and information technology,” said Kent Kresa, chairman, president and chief executive of Northrop Grumman.
He expects the acquisition to boost the company’s expertise in airborne surveillance, particularly in the tactical area.
California Microwave’s defense unit has facilities in the Los Angeles and Baltimore areas and employs about 480 people.
On completion of the deal, Northrop will operate the business as part of its electronic sensors and systems group, based in Baltimore.
California Microwave said it expects to net more than $80 million from the sale after taxes and other closing-related costs. It said it would use the proceeds to retire short-term debt and repurchase its own shares.
The company added that on April 29 it will change its name to Adaptive Broadband Corp. and its stock symbol will be ADAP starting April 30.
