Hercules Inc. is expected to sign a definitive agreement Monday with Alliant Techsystems to sell Alliant its Aerospace Division, which includes the Bacchus Works in Magna.
A letter of intent was signed July 12 between the two companies, but it has taken nearly four months for them to come to terms.The deal will be valued at some $412 million, a Hercules spokesman said, representing a premium of $66 million over the book value of the assets Alliant will acquire.
Under the terms, Hercules will receive $300 million in cash, and 3.86 million new shares of Alliant's common stock will be issued. Alliant paid Hercules $14 million last July when it signed the letter of intent.
Alliant, based in Hopkins, Minn., has told Hercules that upon closure of the deal it will spend some $50 million to buy back about 1.5 million shares of its stock with cash "or other method," subject to market conditions.
Alliant reported sales of $775 million and profits of $39 million for its fiscal year ended March 31. When the deal is closed, Alliant will be a $1.4 billion company with operations in rocket motors, ordnance and munitions, defense electronics and marine systems.
Employment at the company will total some 10,200, but Joel Greenblatt, Alliant's chairman, said Friday his company would implement a "comprehensive operating efficiency and cost-reduction plan over the next year. . . . We expect to derive substantial additional benefits through reduced overhead, consolidation of operations and combined operating efficiencies."
To some observers, that statement sounds suspiciously like job cutbacks, but it could not be confirmed by press deadlines Friday whether or not "operating efficiencies" means a reduction in jobs at Bacchus Works.
If so, it would be a change from four months ago. When the deal was first announced, Hercules executives told Gov. Mike Leavitt that the sale would "have no immediate negative impact" on the Bacchus plant or its employees. Moreover, the governor said he was told that the sale could be very positive for Bacchus "in the long range."
A spokesman for Sen. Orrin Hatch, R-Utah, also said earlier that the senator had been assured that no job cutbacks at Bacchus were contemplated by Alliant other than those already made this year by Hercules.
According to Utah Job Service statistics, Hercules' work force has dropped from 3,000 employees in 1992 to 2,600 employees this year.
Also earlier, Hercules spokesmen David Nicponski and Bob Hessler said Alliant has "committed" to retaining all 5,700 Hercules Aerospace employees of which about 2,000 work at the Bacchus and Clearfield plants and are affected by the merger. Another 600 people employed by Hercules Graphite Fibers Division at Bacchus are not affected by the sale.
Nicponski said Hercules Aerospace has undergone "significant downsizing" in recent years and is now "lean and mean."
According to news reports this year, Alliant Techsystems is not the healthiest of companies. In January 1993, executives announced a third of its 5,600 workers would be laid off. The company at the time said it was taking a $90.5 million net loss on sales of $237.5 million.
The munitions-maker said the layoffs were due to the general decline in the U.S. defense industry.
Alliant is a 1990 spin-off from the huge Honeywell Inc.
The Hercules Aerospace sale to Alliant is subject to federal regulatory approvals and approval by Alliant's shareholders who will vote on the deal after a final agreement is made. The acquisition is expected to close in the first quarter of next year.
Included in the deal are Hercules Space and Strategic Propulsion, Composite Structures, Tactical Propulsion, Ordnance, Hercules Defense Electronics Inc. and Global Environmental Solutions Inc.
Those entities had combined revenues of $660 million and operating profit of $105 million last year.
Alliant had sales of more than $1 billion and a net worth of $65.6 million, according to a Dun & Bradstreet report filed in March 1993. The company is publicly traded and listed on the New York Stock Exchange.
The company has 100 accounts, and 95 percent of its business is to the U.S. government. Branches include the Defense Systems Group in Illinois, Minnesota, New Mexico and Pennsylvania and the Marine Systems Group in California, Hawaii, Maryland, Minnesota, New Jersey, Rhode Island, Texas, Virginia and Washington. Alliant has subsidiaries in the Netherlands and Germany.