When BAE Systems plc acquired Armor Holdings Inc. for $4.5 billion in July 2007, it gained a military vehicle manufacturer with deep contacts in the U.S. military. Armor Holdings had the previous year posted sales of $2.36 billion, much of it coming from a contract supplying the Army with armored vehicles and other equipment.
BAE was banking on that contract and others being renewed. It got a shock, however, when the Pentagon recently awarded a $3.7 billion contract for up to 10,000 military vehicles to OshKosh Corp. As the
Times Online reported, BAE has protested the award, but says it may have to write down much of the $3.5 billion of goodwill related to the Armor Holdings purchase.
It's not clear why the Pentagon went with OshKosh. But Armor Holdings, created through a
rollup of security firms by activist investor Warren B. Kanders' Kanders & Co.,
had been criticized for falling behind on Humvee deliveries during the height of the Iraq war.
U.S. military contractors have had to adjust their expectations and business models amid reduced defense spending under the Obama administration. And with plans being floated to both draw down and build up military presence in Afghanistan, plenty of uncertainty remains.
That may be one reason why BAE has been diversifying its portfolio. The U.K. defense firm in 2008 acquired defense software maker Detica Group plc for $1.07 billion, military intelligence provider MTC Technologies Inc. for $450 million and Australian defense firm Tenix Pty. Ltd. for $684 million. - Suzanne Stevens
Adele Gulfo
And the winners are...
Whoever wrote this needs to do their research! None of the acquired companies do what is stated...
eg. Detica is a consultancy that specialises in intelligence and advanced analytics (for government and commercial clients!)