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Boeing announced it will buy combat engineering firm Argon ST for about $775 million Wednesday, reflecting a shift by defense contractors seeking to accommodate a Pentagon that now wants high-tech intelligence tools as much or more than big guns and heavy armor.
The Pentagon is cutting some big weapons meant for conventional wars out of the budget while it shops for technology better suited to fight against shadowy insurgent groups in places like Iraq and Afghanistan.
Argon ST Inc. is a Fairfax, Va., company that develops a variety of systems used in surveillance, reconnaissance and combat. Boeing’s defense unit CEO Dennis Muilenburg said Argon will “significantly accelerate our capabilities in sensors, communications technologies and information management.”
Boeing Co. seems to have been doing pretty well these past few years. The company has been posting solid profits and increases in earnings. They have been working on a next-generation aircraft, the 787 Dreamliner, which is highly anticipated and has taken many orders already; although its timeline has been delayed approximately two years, it will hopefully be released by the end of this year. The company has a serious competitor in Airbus, but in 2006 Boeing took the lead in terms of number of orders. All of these things are very strong indicators of good performance.
The deal, which is expected to have an immaterial impact on Boeing’s earnings, would be funded with the company’s existing cash.
Following the acquisition, Argon will be a stand-alone unit of Boeing and a new division of Boeing Network & Space Systems, a business within the Boeing Defense, Space & Security operating unit. Terry Collins, chairman and chief executive officer of Argon, along with his management team, will continue to lead the company.
Founded in 1997, Argon develops sensors and networks designed for C5ISR (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance, and Reconnaissance) markets. The products helps to exploit, analyze and deliver information for real-time situational awareness. The company, with about 1,000 employees, operates in Virginia, California, Michigan, Pennsylvania, Florida, Maryland and Texas.
The acquisition is expected to be completed by the end of the third quarter 2010 and is subject to regulatory approval.
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