AAI parent to buy chief competitor in fire training simulators, Symtron

January 25, 1994|By Ted Shelsby | Ted Shelsby,Staff Writer

United Industrial Corp. has agreed to buy a New Jersey competitor in an acquisition that makes United's AAI Corp. subsidiary in Cockeysville the dominant force in the fire trainer simulation market.

Also, United has agreed to sell its Microflite Simulation International Corp., an earlier acquisition that went sour.

On the buying side, United is taking over the operations of Symtron Systems Inc., a privately owned company in Fair Lawn, N.J., that was AAI's chief competitor in the fire trainer business.

Howard M. Bloch, United treasurer, said the acquisition of Symtron would give AAI about 75 percent of the U.S. fire training simulator business and strengthen its ties to foreign markets.

Because the purchase price is expected to be less than $50 million, United is not required to give prior notice to the Justice Department's antitrust division, but the government or another competitor could challenge the purchase on the grounds that it would limit competition, according to Robert Suggs, a law professor with the University of Maryland.

The purchase price was not disclosed, but Robert W. Worthing, an AAI vice president, said the amount would be linked to the performance of the combined operations over the next five years.

Symtron will remain under the direction of its president, John J. Henning, and AAI's fire trainer operations will be merged into Symtron's. Mr. Worthing said he does not anticipate any major shift of AAI workers to Fair Lawn.

United revealed last year that AAI's fire trainer business was operating in the red because of the expense of building the simulators.

AAI's fire training unit simulates fires in buildings, on ships and on airplanes, using fires controlled by electronic sensors.

Robert Henderson, an analyst with David L. Babson & Co., a Cambridge, Mass., money management company that recently sold its 6 percent holding in United's stock, said United's past involvement in the fire trainer business "was such a disaster that I'm not inclined to be thrilled that they are expanding their operations in that area." He said he would be skeptical until United "shows some success."

Mr. Henderson mentioned United's ill-fated 1991 purchase of Microflite, which the company agreed late last week to sell to Reflectone Inc. in Tampa, Fla., for an undisclosed price.

Bernard Fein, president and chairman of United, has said in the past that the purchase of Microflite was a "disaster."

United paid $15.9 million for the Binghamton, N.Y., company, which makes flight simulators used to train commercial pilots, in hopes of lessening AAI's dependence on military contracts. AAI executives hoped that Microflite would boost commercial sales from about 2 percent of AAI revenues to 40 percent within a few years.

It didn't happen. The airline industry, plagued by overcapacity, has been shrinking, and carriers have been laying off pilots. Microflite also was hurt by a $50 million lawsuit filed by CAE-Link Corp. soon after the acquisition, alleging that Microflite violated patent rights related to building the simulators.

AAI eventually closed the Binghamton facility, which lost $5.8 million in 1992.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.