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Boeing to Acquire Rockwell Aerospace and Defense Units
Boeing Significantly Enhances Position as Global Competitor
in Key Defense and Aerospace Markets
SEATTLE, Aug. 1, 1996 -- The Boeing Company (NYSE:BA) and Rockwell International Corporation (NYSE:ROK) announced today that they have signed a definitive agreement under which Boeing will acquire Rockwell's Aerospace and Defense businesses. In the merger, Boeing will issue approximately $860 million of its common stock and retain $2.165 billion of Rockwell debt and certain retiree obligations of Rockwell. Effective date is expected to be later this year. Immediately prior to the merger, Rockwell will transfer its Automation, Avionics, Communications, Semiconductor Systems and Automotive Components Systems businesses to a new company, which will keep the Rockwell name. Shares of the new Rockwell will be distributed to Rockwell shareowners just prior to the effectiveness of the merger on a one-for-one basis. The new Rockwell will be listed on the New York Stock Exchange. The new name of the acquired units will be Boeing North American, Inc., a wholly owned subsidiary of The Boeing Company. The Rockwell Aerospace and Defense units employ approximately 21,000. Boeing Defense & Space Group has approximately 30,000 employees. The transaction, which is intended to be tax free, is subject to approval by Rockwell's shareowners and debtholders, certain regulatory approvals and other provisions generally required in similar transactions. A special Rockwell shareowners' meeting will be held in November and the transaction is expected to be completed shortly thereafter. Phil Condit, Boeing president and chief executive officer, said, "The assets and capabilities we are acquiring are an extremely good strategic fit with our long-term objective of creating shareholder value. This merger accelerates us on our way to achieving our 20-year vision, which calls for Boeing to be a fully integrated aerospace company designing, producing and supporting commercial airplanes, defense systems, and defense and civil space systems. He noted the intent is to grow the business base and expand opportunities. Although there will be some efficiencies that will be identified by combining the organizations, Boeing expects minor employment impact. "My desire," Condit said, "is to absorb any necessary employment adjustments through normal attrition and by retraining employees to take advantage of new business or career opportunities within Boeing. Both of our organizations have records of strong performance and we expect to learn new best practices that will bring increased product value to our customers." Donald R. Beall, Rockwell's chairman and chief executive officer, said, "This is an historic step in the continuing transformation of Rockwell, which has been shifting strategic focus to higher growth commercial and international businesses, with a particular focus on electronics. The new Rockwell will be essentially debt free and well positioned for significant investments in our strong franchises in Automation, Semiconductor Systems, Avionics, Communications and Automotive Components Systems businesses, including internal development and both large and small acquisitions." Beall added, "Our Aerospace and Defense businesses, with their strong franchises, solid management, excellent technologies and outstanding employees, have made strong contributions to Rockwell's success through their world class performance. The benefits to those businesses, their customers and their employees of the alliance with Boeing are compelling. The complementary strengths of Boeing and our Aerospace and Defense businesses create a leading global competitor in this industry." The Rockwell units that Boeing will acquire are:
The major product groups of the acquired divisions are: ICBM systems; tactical missiles; sensors; B-1B bomber; commercial aerostructures; aircraft and helicopter modifications; rocket propulsion including the Space Shuttle main engine; Space Station electric power; airborne laser and electro-optics; Space Shuttle integration, logistics and operations; Global Positioning System satellites; space defense and advanced programs. The Boeing Defense & Space Group encompasses virtually all of the company's business with the U.S. Department of Defense, NASA and international defense customers. Defense and space programs include: helicopters, military aircraft, advanced electronic systems, space transportation and the International Space Station. The Group is organized into five divisions; Information & Electronic Systems, Missiles & Space, Helicopters, Military Airplanes and Product Support. The Boeing Defense & Space Group had 1995 sales of $5.6 billion. The acquired Rockwell units had 1995 sales of $3.2 billion. The new Boeing North American will report to Jerry King, president of the Boeing Defense & Space Group. Boeing North American will be headed by John McLuckey, who is currently president and chief operating officer of Rockwell's Aerospace and Defense businesses. King said, "The capabilities of the Boeing and Rockwell organizations are complementary, and the integration of our two organizations will strengthen Boeing as a prime contractor and make us an even more attractive teammate for joint venture opportunities. We will significantly enhance our capabilities in space systems, including space transportation, satellite and space station programs, and information/battle management systems. We also gain additional capabilities in the air vehicle area, where we will be an industry leader." The new Rockwell comprises:
Boeing and Rockwell are establishing transition teams to develop plans for integrating the two companies' defense and aerospace businesses. Condit and Beall said, "We are committed to making the integration of these businesses as smooth as possible for the employees involved and our customers." The Boeing Company is the world's leading manufacturer of commercial jet aircraft and one of the nation's top exporters. Boeing had 1995 sales of $19.5 billion and projects 1996 sales of $22 billion not including the effect of the merger. The new Rockwell will be a global, diversified technology company holding leadership market positions in automation, avionics, communications, semiconductor systems, government communications and automotive component systems with projected sales of approximately $10 billion. CS First Boston is the financial advisor to Boeing and will act as its agent with respect to Rockwell debtholder approval. Morgan Stanley & Co. and Dillon, Read & Co. Inc. are financial advisors to Rockwell. |
