Orbital To Acquire GD Satellite Business

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WASHINGTON — Space hardware builder Orbital Sciences Corp. will buy the satellite-making business of General Dynamics Corp. under an agreement announced by Dulles, Va.-based Orbital March 4.

Orbital will pay $55 million in an all-cash transaction for the division, Orbital Chairman and Chief Executive David W. Thompson said in an interview. The deal is expected to close in four to five weeks and does not require any external approvals, he said.

Houlihan Lokey, a financial services firm specializing in mergers and acquisitions, advised Orbital on the deal, Orbital said in a press release.

Formerly known as Spectrum Astro, the General Dynamics satellite division currently is part of GD Advanced Information Systems and is located in Gilbert, Ariz. The company builds small to medium-sized satellites, primarily for U.S. government customers but also for the occasional commercial client. Some of its recent satellites include NASA’s Fermi astronomy telescope, the Near Field Infrared Experiment, or NFIRE, experimental satellite for the U.S. Missile Defense Agency and the GeoEye-1 commercial imaging satellite for GeoEye of Dulles.

GeoEye has authorized construction to begin on the main camera for the GeoEye-2 imaging satellite but has yet to select a satellite-platform manufacturer.

Orbital said General Dynamics-built satellites have ranged in mass from 500 kilograms to 4,000 kilograms and typically are designed for three years to seven years of operation in various low Earth orbits.

Orbital Sciences has long built similar satellites for many of the same customers. In its press release, Orbital said the acquisition will strengthen its business with the U.S. Department of Defense and intelligence community as well as with civil customers, including NASA and the U.S. National Oceanic and Atmospheric Administration.

“There is a compelling strategic fit between Orbital’s current satellite business and the General Dynamics spacecraft unit in terms of the markets and customers we serve, the types of satellite platforms we design and build, and the highly skilled and experienced engineering, manufacturing and operations professionals we count on to make this possible,” Thompson said in a prepared statement. “I am very excited to add the technological know-how and practical experience of the GD satellite team to our company.”

Orbital said that as part of the deal, it will get a 12,150-square-meter, state-of-the-art manufacturing, integration and test facility in Gilbert that was completed in 2005. The facility, which Orbital said has special security provisions for highly classified programs, is located 16 kilometers from Orbital’s rocket-manufacturing plant in Chandler, Ariz.

“Upon closing of the acquisition, about 325 new employees will join Orbital, most of whom are engineers, technicians and program managers, many with security clearances for sensitive U.S. Government programs,” Orbital said in its press release.

During a Feb. 18 conference call on his company’s 2009 financial results, Thompson was bullish on Orbital’s current and future business with U.S. national security customers. He said that business grew by 15.6 percent in 2009 and is expected to have a double-digit growth rate this year. “The outlook continues to be very encouraging,” he said.

Meanwhile, Orbital’s missile defense business is expected to decline in the coming years as a large contract to develop booster rockets for the Ground-based Midcourse Defense system winds down. The company expects to win three or four orders this year for the medium-sized telecommunications satellites that it builds for commercial customers, compared to four last year.