December 1, 2005
L-3 to acquire SAM Electronics
L-3 Communications (NYSE: LLL) announced today that it has signed an agreement to acquire SAM Electronics GmbH (SAM) for U.S. $150 million in cash, subject to customary closing conditions and regulatory approvals. SAM is expected to generate approximately $320 million of sales for the year ending December 31, 2006. The acquisition is expected to be completed in the first half of 2006 and to be slightly accretive to L-3's earnings.
Headquartered in Hamburg, Germany, SAM is a manufacturer and supplier of maritime electrical and electronic systems to shipyards, shipping companies, international navies and commercial shipyards. SAM's products include electrical power packages, electric drives and propulsion systems, automation systems, navigation and communication equipment and maritime services. The company also provides turnkey installation of its products.
"SAM is complimentary to our existing Power and Controls business and brings us new opportunities in international commercial and military markets," said Frank C. Lanza, chairman and chief executive officer of L-3 Communications. Mr. Lanza noted that SAM is a leader in the supply of complete Integrated Navigation and Radar Systems for the worldwide marine market.
"SAM is an electrical system integrator for commercial and military ships, and that gives L-3 expanded markets in a growing commercial segment for both the building of new ships and the power conversion of existing ships," said Mr. Lanza. "With this acquisition, L-3 can be a robust competitor for electrical systems, providing long-term growth opportunities as more and more ship systems migrate from mechanical systems to electric power."
"It also means that L-3 can introduce SAM's well-established products and services through L-3's existing customer relationships into the U.S. military market," said Mr. Lanza. "As a result, L-3 will be able to provide much more capability to U.S. military customers in areas such as navigation and radar, integrated bridge and low-end automation."
"SAM also enables L-3 to have a significant presence in the worldwide market," continued Mr. Lanza. In fact, SAM is a major supplier to the German Navy and also supplies to other foreign Navies. SAM also has a manufacturing and system engineering presence in both Europe and Asia. Mr. Lanza noted that certain SAM products are installed on approximately 35% of all large commercial ships built annually.
"With this acquisition, L-3 will now be a full capability provider to and a robust competitor in the European markets for shipbuilding," added Mr. Lanza, who also noted that SAM has a solid, well-run annuity-type business with a large and stable installed base and solid growth potential. "For future growth opportunities, SAM has also developed a solid foothold in the Asian commercial market, particularly Korea and China, and this could be a good, growing market for all of L-3's Power and Control systems products going forward," concluded Mr. Lanza.