Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 8, 1994 TAG: 9403080091
SECTION: BUSINESS PAGE: C-8 EDITION: METRO
SOURCE:
DATELINE: NEW YORK LENGTH: Medium
The deal would wrap up a Martin Marietta shopping spree that doubled the company's size in the past year. It also would end Grumman's independence after a slide from pre-eminence as the chief maker of Navy warplanes.
Until 1992, the company operated Grumman Emergency Products Inc., a fire-engine assembly plant in Roanoke that employed nearly 300.
With less federal money being spent on jet fighters, tanks and helicopters, the companies that make weapons and the sophisticated electronics behind the guns either have been buying competitors or retrenching.
The buyout news sent Grumman's stock soaring Monday and lent confidence to the rest of the stock market.
With its purchase of General Electric's aerospace business last year and General Dynamics' space division, Martin Marietta had already shown itself the most aggressive of the defense contractors trying to grow while the rest of the business shrinks.
"We looked at every company in the industry," said Norman R. Augustine, Martin Marietta chairman and chief executive. "It was very important to be among the first to select. . . . We wanted first-round draft choices."
"The industry is ripe for consolidation in a number of segments, as Martin Marietta is proving," said Jerrold Lundquist, a partner at management consultants McKinsey & Co.
The deal was put together with bank loans rather than a stock offering to speed it along after Augustine and Grumman Chairman Renso Caporali agreed a month ago to pursue the buyout, the two men said.
Further Pentagon spending cuts could lead to job losses, but the companies haven't decided whether the takeover will result in layoffs.
The two executives acknowledged there is some overlap between their companies but said the buyout was not done as a way to cut jobs.
"It isn't like we're both working on the same things," said Caporali, who will remain chief executive of Grumman as a Martin Marietta subsidiary and join the parent company's board.
"I don't see anything there to throw away. But we've only been working on this for a month. When we get into the nitty gritty, we might find some duplication."
Grumman, headquartered in Bethpage, N.Y., already has started a restructuring that would close one-third of its factory and warehouse floor space and reduce its work force by 500 jobs, or 3 percent. Martin Marietta plans by year's end to cut 3,500 jobs - 2,000 resulting from the purchase of GE Aerospace.
The Grumman buyout is subject to Justice Department approval, but the companies said they don't foresee any antitrust problems.
by CNB