Finmeccanica to acquire DRS Technologies

The Wall Street Journal (5/13, B3, Michaels, Cole) reports that "Italian aerospace and defense conglomerate Finmeccanica SpA agreed to acquire U.S. defense-electronics firm DRS Technologies Inc. for $4 billion, or $81 per share." The agreement "is the latest sign that European defense companies, benefiting from a weak dollar, are turning more aggressive to expand into the massive U.S. defense market."

The Financial Times (5/13, Pfeifer) notes, "Companies from America's closest allies, British, Canadian and Australian defense companies, have previously led the charge into the U.S. market." The acquisition by Finmeccanica Spa "still needs to pass regulatory hurdles and will test the boundaries of what a continental European defense contractor can buy in the U.S., analysts said."

Reuters (5/13, Biondi, Pomeroy) adds that the "growing U.S. defense market...accounts for half the world's military spending," while Finmeccanica is "Europe's fourth largest aerospace and defense group." Under the deal, "DRS will operate as a wholly-owned subsidiary, maintaining its current management and headquarters with a board comprised predominantly of U.S. citizens holding security clearances that will allow it to comply with security requirements." The company "supplies products such as radar and surveillance to military forces and intelligence agencies."

Bloomberg (5/13, Bertacche, Dentch) points out that "Finmeccanica, based in Rome, is controlled by the Italian government with a 32 percent stake." It "makes carbon- fiber frames for Boeing Co.'s 300-seat 787 Dreamliner, and its AgustaWestland helicopter division has a supply contract with Lockheed Martin Corp. for the U.S. presidential fleet." Thomson Financial (5/13, Madway) also covers the story.