Alliant Techsystems Inc. Wednesday confirmed rumors circulating this month when it said it will acquire Alcoa's Thiokol Propulsion business in Utah for $685 million in cash.
Thiokol, which makes rocket propulsion systems for space-launch vehicles, with sales of some $570 million, became a subsidiary of Alcoa when Cordant Technologies, based in Salt Lake City, was acquired by Alcoa last May.
Alliant, which has major operations in Magna, also is a supplier of aerospace and defense products, including conventional munitions and propulsion rocket motors.
The deal is expected to close by the end of May pending the usual regulatory approvals, but it has been approved by directors of both companies.
"This transaction is beneficial to all parties involved," said Alain Belda, chairman and CEO of Pittsburgh-based Alcoa.
"It delivers value to Alcoa shareholders and Thiokol becomes a strategic part of ATK, a company in the propulsion business and positioned to help Thiokol realize the full value of its products and technologies."
Paul David Miller, chairman and CEO of Alliant, based in Hopkins, Minn., agreed the deal was a "sound strategic acquisition that will deliver significant value to customers, employees and ATK shareholders."
Assuming it's approved, Miller said Alliant will have a "blend of propulsion, expertise, leadership spirit and personal commitment to integrate effectively these businesses."
Neither Alcoa nor Alliant would comment on what the employment impact, if any, would be in Utah. Alliant spokesman David Nicponski said the two companies will "keep the media posted" as those decisions are made but there will be no comment at this time on whether jobs will be added or lost from the merger.
Lauren Sides, spokeswoman for Alcoa Industrial Components in Salt Lake City (formerly Cordant Technologies), said it is too early to tell what the impact on management or staff will be but said the downtown headquarters currently has 35 employees and the Thiokol operations at Promontory, Clearfield and Ogden employ some 3,800.
In addition to Howmet Castings and Huck Fasteners, the Salt Lake office has assumed headquarter duties for Alcoa's Automotive Group and its Wheels and Forged Products Group, making it a $4 billion part of Alcoa.
Alliant held a brief press conference Wednesday that was broadcast on the Internet, in which Miller made a statement concerning the deal but refused to take questions from the media listening online and would not speculate on what the deal means to the Thiokol complex near Promontory, west of Corinne and Brigham City.
Miller agreed there are "lots of questions" related to the Thiokol acquisition but said most of them cannot be answered at this time.
However, he made it clear in his remarks that he wasn't buying Thiokol to dismantle it. He said the merger means Alliant has put together a company that has $1.7 billion in sales, a backlog of about $4 billion and back contracts of $5 billion.
"When I took the reins of ATK I told our largest shareholders and analysts we'd underpromise and overperform. I think we've done that in the last couple of years and I use that as my personal bumper sticker."
With interest rates coming down, Miller said he was comfortable with where Thiokol is going. "We have some really significant, important, major programs: boosters for the space shuttle, the Minuteman, commercial space boosters . . .
"What I'm really pleased about is it diversifies ATK's existing business base (and) rounds out more fully our customer portfolio. The shuttle will become approximately 20 percent of ATK's business. It adds long-term shuttle work, long-term Trident and Minuteman base, and a total backlog of $5 billion for this company is very impressive. It adds strong cash flows from both space and strategic programs."
Miller said he takes debt "very, very seriously" and that he plans to create value for shareholders from the leveraging of the added capabilities. "It adds strong research and development capability. Thiokol has some of the best scientific minds in propulsion. We look forward to combining that with our experts."
Miller said he has sent notes to all Alliant employees telling them that "it's their work for the last couple of years that has permitted us to come to this decision."
Aluminum-maker Alcoa Inc. acquired Salt Lake-based Cordant Technologies Inc., the parent company of Thiokol Propulsion, last May for $2.3 billion. Cordant, now called Alcoa Industrial Components, then had 17,000 workers worldwide in its three business groups: Thiokol Propulsion, Howmet Castings and Huck Fasteners.
Howmet and Huck are not part of the deal announced Wednesday. Thiokol, which makes solid-rocket systems such as the space shuttle booster rockets, is by far Cordant's best-known group. Cordant bought Howmet and Huck in the 1990s in an attempt to diversify its businesses from defense and NASA projects.
Thiokol Chemical Corp. was founded in 1929. In 1957 it bought an isolated tract of land near Promontory, Box Elder County, to manufacture and test large solid rocket motors. It also has a facility in Clearfield that restores the used rocket motors and a small facility in Ogden that makes composite materials that can be used in a variety of products, including golf club shafts.
Thiokol's low point came in 1986 when an "O" ring on one of the company's boosters failed, causing the space shuttle Challenger to explode shortly after liftoff and killing everyone on board.
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