Lockheed-Loral deal expected to close today Augustine hints pace of takeovers will slow after acquisition

April 23, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

WASHINGTON -- Lockheed Martin Corp. will close on its $9.1 billion acquisition of the bulk of Loral Corp. early this morning, Norman R. Augustine, president and chief executive of the Bethesda-based defense and aerospace giant, said yesterday.

Speaking at the National Press Club, Mr. Augustine expressed confidence that Lockheed Martin would obtain the two-thirds of Loral shares required to make the acquisition final.

The satellite business of New York-based Loral is not a part of the acquisition. That business will be the basis of a new company, Loral Space & Communication Corp., of which Lockheed Martin will have a 20 percent interest.

The deadline for Loral shareholders to tender their stock was midnight last night. Mr. Augustine said the company would be celebrating at 12: 01 a.m. today.

Mr. Augustine indicated that completion of the Loral purchase will likely trigger a slowing in the pace of acquisitions and mergers in recent years that have made Lockheed Martin the nation's largest defense and aerospace company.

"We are approaching the point that FTC [Federal Trade Commission] concerns [about fair competition] will be legitimate," Mr. Augustine said.

He said prices of defense and aerospace companies have risen sharply since 1992, when what was then Martin Marietta Corp. began its buying spree. "Everything has been picked over," he said. "Most of the big companies have been picked off."

Thirty thousand Loral employees will shift to Lockheed Martin when the acquisition is completed.

Frank Lanza, president and chief operating officer of Loral, said there will be some decline in jobs in the short term, but they are expected to grow in the future. He said it would take about 90 days to determine how many jobs could eliminated as a result of the consolidation.

Mr. Augustine used the occasion to respond to the president and chief executive of McDonnell Douglas Corp., Harry Stonecipher, who recently said McDonnell Douglas will stop buying components from Lockheed Martin.

Mr. Augustine said Lockheed Martin's policy will be to build the best systems possible, using components it makes itself or buys from the outside. He said the company will continue to sell components it builds to its competitors.

Lockheed Martin spends about $15 billion a year in purchases from other companies. Those purchases, according to Mr. Augustine, create about 100,000 jobs.

Mr. Augustine said he does not believe "it serves our customers, our country or either of ourselves" to have a black-list purchasing policy, and expressed hope that McDonnell Douglas will reconsider its policy.

Pub Date: 4/23/96

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