Finmeccanica buys DRS Technologies for $5.2 billion

The purchase allows the Rome-based Finmeccanica, Italy's leading defense company, to acquire a key role in the U.S. market. DRS hopes that the new company will be able to bid on large-scale projects in the United States and abroad.

Finmeccanica will pay US$81 (euro52.50) per share in cash, a statement said. The overall bid includes US$1.2 billion (euro780 million) in net debt.

Under the agreement, DRS will operate as a wholly owned subsidiary. It will maintain its current management and headquarters, located in Parsippany, New Jersey.

"Today's transaction is a perfect fit," said Pier Francesco Guarguaglini, chairman and chief executive of Finmeccanica. "The merger furthers Finmeccanica's tradition of investing in the U.S. and supporting the American warfighter with superior technology and value."

Finmeccanica shares opened up 1.2 percent At euro21.62 (US$33.36) in Milan.

Finmeccanica's core competencies include the design and manufacture of helicopters, civil and military aircraft, satellites, space infrastructure, missiles and defense electronics.

DRS is a leading supplier of integrated products, services and support to military forces, government agencies and prime contractors worldwide.

"This investment in DRS -with an increased emphasis on research and development -will mean the combined company will be able to compete for and win additional contracts around the world, accelerating growth and expanding opportunities at our facilities in the U.S.," said Mark S. Newman, chairman of the board, president and chief executive officer of DRS.

The transaction values the shares with a premium of 27 percent to DRS' closing share price on May 7, 2008, according to the statement. It is also a 32 percent premium over DRS' thirty-day average stock price traded on the NYSE.