Boeing Co. said Thursday it is buying the bulk of Rockwell International Corp.'s aerospace and defense holdings in a $3 billion deal that transforms the world's biggest maker of commercial jets.
Boeing will acquire the company for $860 million in stock and also will assume almost $2.2 billion in Rockwell debt.The deal gives Boeing new tools to make the most of its position as the top contractor for the international space station and puts it in a stronger position to get a bigger share of smaller defense budgets.
Rockwell, which built and supports the Air Force's B-1 bomber fleet, has moved aggressively in new directions such as factory automation, computer modems and semiconductors to cope with the shrinking weapons business.
Rockwell has competed with Boeing for government contracts for laser and directed-energy weapons.
Phil Condit, the president and chief executive of Boeing, said that while he hopes there will be efficiencies by combining operations, Boeing expects only a minor impact on employment.
He called the combination "an extremely good strategic fit" and said the goal is to expand the business.
Rockwell's aerospace and defense units had sales of $3.2 billion last year and have about 21,000 employees. Boeing's defense and aerospace group had 1995 sales of $5.6 billion and about 30,000 employees.
The Rockwell properties will become Boeing North American Inc., a division of Seattle-based Boeing, the companies said in the joint announcement Thursday.
The deal is subject to approval by regulators and by holders of Rockwell stock and debt. A special shareholders meeting is planned in November, and the companies said they expected the sale to be completed then.
The deal comes at a time of consolidation in the defense industry as the growth of military spending is being curbed.
Through mergers, Lockheed Martin Corp. has overtaken McDonnell Douglas Corp. as the nation's largest defense contractor. It was formed by the marriage of Lockheed and Martin Marietta and has since acquired Loral Corp.