ITT BROADENS ITS DEFENSE BASE WITH EDO ACQUISITION
By Julian Nettlefold, Editor, BATTLESPACE
On September 17th, ITT Corporation (NYSE: ITT) and EDO Corporation (NYSE: EDO), a global aerospace and defense company, reached a definitive agreement for ITT to purchase all outstanding shares of EDO for $56 per share in cash. Including approximately $120m in debt and the conversion of convertible notes, this transaction values EDO at $1.7bn. The transaction is expected to be neutral to ITT’s earnings per share in 2008, and accretive thereafter.
“This combination is all about growth and demonstrates our disciplined approach to creating value for our shareholders by expanding from our strong core businesses and entering attractive adjacent markets,” said Steve Loranger, chairman, president and chief executive officer of ITT. “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. 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.”
EDO is a leader in the design and development of advanced systems at the center of the military’s transformation to lighter, faster, and smarter defense capabilities. EDO 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 $1.15bn.
“We believe this is an excellent strategic fit and offers shareholders tremendous value,” said EDO Chief Executive Officer James M. Smith. “It substantially increases our business scale and opens new opportunities in defense markets. We expect employees and customers to benefit substantially from the combination of our technology-driven businesses.”
The transaction, which is subject to approval by EDO’s shareholders, as well as customary closing and regulatory conditions, is expected to close in early 2008.
Poised for growth
EDO’s attractive positions in defense electronics add to ITT’s well-established sensing and surveillance capabilities. In tactical communications, ITT’s leading position in battlefield communications is complemented by EDO’s expertise in mobile networking and integration, interference cancellation and antennas. Both companies offer engineering and professional services to a diverse customer base, serving all branches of the military and civil agencies.
“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.”
To underline the strategy behind this acquisition, ITT showed its diversified defense technology base in a number of key presentations to journalists during DSEI.
ITT Visual Information Solutions (VIS)
ITT Visual Information Solutions (VIS), previously Research Systems, Inc., was purchased by ITT from Kodak. The company provides integrated software solutions that help scientists, engineers, researchers and medical professionals turn complex data into useful information. The company has 150,000 customers from over 80 countries use IDL, ENVI and IAS to analyze data and imagery and deploy imaging applications.
The main defense product is ENVI
ENVI provides a robust set of features and functionality geared to the defense and intelligence community’s geospatial imagery needs. And, the newest ENVI functionality – including the ENVI Zoom interface – makes it easier than ever for you to read, explore, prepare, analyze, and share geospatial imagery.