Martin Marietta Corp. said Monday it had agreed to buy General Electric Co.'s aerospace business for more than $3 billion in cash and stock.
The companies are among the nation's leading aerospace research and development organizations."The defense budget is clearly declining and industry must consolidate," said Martin Marietta chief executive and chairman Norman R. Augustine. "The companies that do consolidate early will be the survivors. There is room for strong survivors. There is no room for weak companies.
"I truly think this is good for the government," Augustine said. "It's my hope that the government will be supportive."
Under terms of the deal, GE will receive cash and $1 billion in convertible preferred stock in Martin Marietta, based in Bethesda, Md. Martin Marietta will support GE's nomination of two members to its expanded board of directors.
"This agreement brings together two outstanding organizations to create an even stronger one and will have both immediate and long-term value," said a joint news release issued by Augustine and John F. Welch Jr., GE's chairman and chief executive.
"This merger will allow the new company to walk into the global arena as No. 1 in its industry, with twice the resources and a fraction of the overhead that the two companies that created it," Augustine and Welch said.
With the addition of the GE operations, Martin Marietta's annual revenues will nearly double, approaching $11 billion, including approximately $3 billion in sales from commercial and civil government customers.
Martin Marietta employs about 57,000 people, including 27,000 engineers and scientists.
GE's aerospace division had revenue last year of $5.3 billion, nearly as large as Martin Marietta's total 1991 revenue of $6.1 billion.
Profit on GE's aerospace division was $655 million last year - more than twice Martin Marietta's corporate profit of $313.2 million.