Significant acquisitions made by General Dynamics in the years 2009 to 2011 are discussed in the following. In 2011, General Dynamics acquired six businesses (four of which highlighted below) for an aggregate of $1.6 billion in cash. In 2010, the company acquired three businesses (two of which highlighted below) for an aggregate of $233 million in cash. In 2009, General Dynamics acquired two businesses for an aggregate of $811 million in cash.
On December 19, 2011, General Dynamics announced the successful completion of its tender offer to purchase all of the outstanding shares of common stock of Force Protection, Inc., a provider of wheeled vehicles, survivability solutions and vehicle sustainment services for the armed forces of the United States, for a price of $5.52 per share in cash or approximately $360 million. The tender offer was launched on November 18, following the announcement on November 7 that General Dynamics and Force Protection had reached agreement on the terms of a merger agreement. The acquisition of Force Protection is expected to be accretive to General Dynamics' earnings in 2012. Force Protection will become a wholly owned subsidiary of General Dynamics as a result of the merger and will become part of General Dynamics Land Systems (Combat Systems Segment).
On October 31, 2011, General Dynamics completed its acquisition of Metro Machine Corp., a leading East Coast surface-ship repair company that supports the U.S. Navy fleet in Norfolk, Va. The value of the cash transaction has not been disclosed. Metro Machine Corp. now becomes part of the shipbuilding and repair operations of San Diego-based General Dynamics NASSCO (Marine Systems Segment), a leading provider of ships to the Navy, a major producer of commercial vessels and the largest shipbuilding and repair company on the West Coast.
On September 30, 2011, General Dynamics completed its acquisition of Vangent Holding Corp., the parent company of Vangent, Inc., a leading provider of healthcare information technology and business systems to federal agencies. The cash transaction, valued at approximately $960 million, was announced on August 16 and is expected to be accretive to General Dynamics' earnings in 2012. Vangent was majority-owned by The Veritas Capital Fund III, L.P. Vangent now becomes part of General Dynamics Information Technology, headquartered in Fairfax, Virginia Vangent's core offerings include health informatics and information exchange, electronic health records and data analytics, as well as state-of-the-art business-process outsourcing solutions and systems. It supports customers in the U.S. Departments of Health and Human Services, Commerce, Education, Justice Labor, State, Veterans Affairs and Military Health Systems.
On August 12, 2011, General Dynamics completed its purchase of an undisclosed provider of information assurance and security software.
On July 22, 2011, General Dynamics completed its purchase of Fortress Technologies, Inc., a provider of secure wireless networking equipment for the U.S. military and other government customers. The value of the cash transaction, which is expected to be accretive to General Dynamics' earnings beginning in 2012, has not been disclosed. Fortress Technologies produces a portfolio of mesh networking products that enable secure wireless network capabilities for battlefield logistics, convoy, command post and soldier applications. Built on commercially available technologies, Fortress Technologies' ruggedized products improve soldiers' combat effectiveness and survivability by increasing their access to information. The company is based in Westford, Massachusetts, and has approximately 70 employees. Fortress Technologies will be managed by General Dynamics C4 Systems based in Scottsdale, Arizona.
On July 15, 2011, General Dynamics acquired Network Connectivity Solutions Corp., a provider of enterprise services and cloud computing to the U.S. Department of Defense (DoD). The value of the cash transaction was not disclosed. The deal gives General Dynamics access to the Defense Information Systems Agency's (DISA) Encore II vehicle. Founded in 1997, Netconn provides enterprise information technology services to DISA and other DoD agencies. The company is based in Hagerstown, Maryland and has approximately 160 employees.
On June 22, 2010, General Dynamics United Kingdom Limited, a business unit of General Dynamics, acquired the privately held Kylmar (KMC) Limited, an industry leader in the design and manufacture of sensor and optical surveillance systems for military and security applications. The value of the cash transaction, which was accretive to General Dynamics' earnings beginning in 2011, was not been disclosed. Kylmar will become part of General Dynamics United Kingdom Limited, enhancing the company's intelligence, surveillance, targeting and reconnaissance offerings and capabilities provided within the defence, security and resilience markets. Kylmar is based in Andover, Hampshire, England, and has approximately 50 employees. Kylmar has been supplying electro-optic equipment and systems into the UK military intelligence and Special Forces for counter-terrorism applications for nearly two decades.
On May 12, 2010, General Dynamics acquired EBV Explosives Environmental Company, an industry leader in demilitarization, incineration and disposal of munitions, explosives and explosive wastes. Terms of the cash transaction were not disclosed but the acquisition was accretive to General Dynamics' earnings in 2010. The organization will be part of General Dynamics Ordnance and Tactical Systems, a business unit of General Dynamics, and will be known as General Dynamics Ordnance and Tactical Systems – Munition Services. It is based outside of Joplin, Missouri and has approximately 130 employees.
On January 8, 2010, General Dynamics completed its purchase of an undisclosed provider of software for military mission planning and execution.
On September 2, 2009, General Dynamics Advanced Information Systems, a business unit of General Dynamics, completed its purchase
of Axsys Technologies, Inc., for $54 in cash per share of Axsys Technologies' outstanding common stock.
The cost of the transaction is approximately $643 million. The acquisition was neutral to General Dynamics' earnings in 2009 but accretive thereafter.
Axsys Technologies is a global leader in the design and manufacture of high-performance electro-optical and infrared (EO/IR)
sensors and systems and multi-axis stabilized cameras. The company's solutions are typically found in applications that demand the finest optical
surfaces, highest accuracy and tightest motion-control tolerances, such as weapon systems, long-range surveillance cameras
and highly precise imaging telescopes. The company employs approximately 1,000 workers in five principal locations:
Cullman, Alabama; San Diego and Grass Valley, California; Nashua, New Hampshire; and Rochester Hills, Michigan.
On January 26, 2009, General Dynamics completed its purchase of an undisclosed information technology services business that performs work
for General Dynamics' classified customers.
General Dynamics funded all the above acquisitions using cash on hand. The operating results of these acquisitions have been included with the company's reported results since their respective closing dates. In 2011, General Dynamics recognized in other income $17 million of transaction-related costs associated with the company's acquisitions.
The purchase prices of these acquisitions have been allocated preliminarily to the estimated fair value of net tangible and intangible assets acquired, with any excess purchase price recorded as goodwill.
In 2011, General Dynamics sold the detection systems portion of the weapons systems business in the Combat Systems group. The pretax gain of $38 million on the sale was reported in other income in General Dynamics' Consolidated Statement of Earnings. The proceeds from the sale are included in other investing activities on the Consolidated Statement of Cash Flows.