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DRS RECEIVES UNSOLICITED PROPOSAL FROM L-3

DRS TECHNOLOGIES RECEIVES UNSOLICITED PROPOSAL FROM L-3

01 Jul 04. DRS Technologies, Inc. (NYSE: DRS – News) today confirmed that during the last month it received an unsolicited proposal from L-3 Communications Holdings, Inc. (NYSE: LLL – News) to acquire DRS for $42.00 per share in cash. The proposal was subject to due diligence and the negotiation of a merger agreement. DRS’s board of directors conducted a process for evaluating the proposal on a basis consistent with its responsibilities.

DRS engaged Bear, Stearns & Co. Inc. as its financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as its legal counsel to assist in this process. Following several meetings of its board of directors, DRS advised L-3 that its board of directors has confidence in the company’s growth prospects and that based on this and other factors, DRS’s board of directors unanimously determined that L-3’s proposal would not be in the best interests of DRS’s stockholders.

Shares in DRS surged 23% on Thursday after the buyout proposal from L-3 Communications (LLL:NYSE – commentary – research). DRS said L-3 offered to pay $42 a share in cash. But the company said its board unanimously rejected the offer, saying it has “confidence in the company’s growth prospects” and that the bid isn’t in shareholders’ interests.

“At this time,” DRS said, “the company does not intend to make any further public comment on this matter.” L-3 didn’t comment. On Thursday, DRS shares rose $7.40 to $39.30. New York-based L-3 slipped $1.40 to $65.40.

Comment: In our last interview with mark Newman, CEO of DRS, we touched on any concern he might have for the receipt of such an offer from L-3, given the synergies of the two companies. Newman said that in no way would he considers selling the company at that stage and this rebuff confirms his view. However, L-3 is looking for a replacement for Frank Lanza who is soon to retire and Mark Newman, given his huge success and charisma in the huge growth and success of DRS would fit the bill and may well be wooed eventually, but not at any price and not in the short-term!

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