ITT Corp., the defense electronics and services contractor and global manufacturer based in White Plains, last week announced its pending $1.7 billion purchase of EDO Corp., a global aerospace and defense company.
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ITT agreed to purchase all outstanding shares of EDO stock at $56 per share. The transaction, which also includes approximately $120 million of net debt and the anticipated conversion of convertible notes, is expected to be neutral to ITT’s earnings per share in 2008 and accretive thereafter, ITT officials said.
Based in New York City and employing about 4,000 people worldwide, EDO is a leader in the design and development of advanced electronics and engineering systems at the center of the military’s transformation to lighter, faster and smarter defense capabilities. The company has grown revenues at a compound annual growth rate of almost 16 percent over the last three years and is positioned to grow at approximately 60 percent in 2007 to its current-year forecast of approximately $1.15 billion. EDO reported revenues of $715 million in 2006.
“ITT”™s continued strong overall performance this year gives us the capability to make this key acquisition, which will be a powerful addition to our existing business,” said Steve Loranger, chairman, president and CEO of ITT. “EDO”™s extremely talented people, complementary technologies and customer relationships, when joined with ITT”™s strong defense team, will enable us to reach new heights in meeting the changing needs of our military and civil customers.”
ITT officials said the transaction positions the company to play an important role on some of the U.S. military”™s vital transformational initiatives, such as the Joint Strike Fighter, the Navy”™s Littoral Combat Ship, counter improvised explosive device (IED) programs and the Coast Guard deep-water programs.
“We’re bringing together two successful defense organizations into one team with one mission: to meet the needs of our customers in support of our nation and its allies,” said Steve Gaffney, president of ITT’s defense business. “We are confident in our plan to integrate our businesses and unlock tremendous value, creating opportunity for employees, customers and shareholders.”
EDO CEO James M. Smith called the merger “an excellent strategic fit” that “substantially increases our business scale and opens new opportunities in defense markets.”
The transaction, subject to approval by EDO’s shareholders, is expected to close in early 2008.
ITT”™s financial advisors in the transaction are Lazard L.L.C. and UBS Investment Bank, while EDO”™s financial advisor is Citigroup.
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