Boeing to Acquire Rockwell Aerospace and Defense Units

From:         kls@ohare.Chicago.COM (Karl Swartz)
Organization: Chicago Software Works, Menlo Park, California
Date:         01 Aug 96 13:34:26 
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[Boeing Press Release]

Boeing Significantly Enhances Position as Global Competitor in Key
Defense and Aerospace Markets

SEATTLE, Aug. 1, 1996  -  The Boeing Company (NYSE:BA) and Rockwell
International Corporation (NYSE:ROK) announced today that they have
signed a definitive agreement under which Boeing will acquire
Rockwell's Aerospace and Defense businesses.

In the merger, Boeing will issue approximately $860 million of its
common stock and retain $2.165 billion of Rockwell debt and certain
retiree obligations of Rockwell.  Effective date is expected to be
later this year.

Immediately prior to the merger, Rockwell will transfer its Automation,
Avionics, Communications, Semiconductor Systems and Automotive
Components Systems businesses to a new company, which will keep the
Rockwell name.  Shares of the new Rockwell will be distributed to
Rockwell shareowners just prior to the effectiveness of the merger on a
one-for-one basis.  The new Rockwell will be listed on the New York
Stock Exchange.

The new name of the acquired units will be Boeing North American, Inc.,
a wholly owned subsidiary of The Boeing Company.  The Rockwell
Aerospace and Defense units employ approximately 21,000.  Boeing
Defense & Space Group has approximately 30,000 employees.

The transaction, which is intended to be tax free, is subject to
approval by Rockwell's shareowners and debtholders, certain regulatory
approvals and other provisions generally required in similar
transactions.  A special Rockwell shareowners' meeting will be held in
November and the transaction is expected to be completed shortly

Phil Condit, Boeing president and chief executive officer, said, "The
assets and capabilities we are acquiring are an extremely good
strategic fit with our long-term objective of creating shareholder
value.  This merger accelerates us on our way to achieving our 20-year
vision, which calls for Boeing to be a fully integrated aerospace
company designing, producing and supporting commercial airplanes,
defense systems, and defense and civil space systems.

He noted the intent is to grow the business base and expand
opportunities.  Although there will be some efficiencies that will be
identified by combining the organizations,  Boeing expects minor
employment impact.

"My desire," Condit said, "is to absorb any necessary employment
adjustments through normal attrition and by retraining employees to
take advantage of new business or career opportunities within Boeing.
Both of our organizations have records of strong performance and we
expect to learn new best practices that will bring increased product
value to our customers."

Donald R. Beall, Rockwell's chairman and chief executive officer, said,
"This is an historic step in the continuing transformation of Rockwell,
which has been shifting strategic focus to higher growth commercial and
international businesses, with a particular focus on electronics. The
new Rockwell will be essentially debt free and well positioned for
significant investments in our strong franchises in Automation,
Semiconductor Systems, Avionics, Communications and Automotive
Components Systems businesses, including internal development and both
large and small acquisitions."

Beall added, "Our Aerospace and Defense businesses, with their strong
franchises, solid management, excellent technologies and outstanding
employees, have made strong contributions to Rockwell's success through
their world class performance.  The benefits to those businesses, their
customers and their employees of the alliance with Boeing are
compelling.  The complementary strengths of Boeing and our Aerospace
and Defense businesses create a leading global competitor in this

The Rockwell units that Boeing will acquire are:
      Space Systems Division, Downey, California
      Rocketdyne Division, Canoga Park, California
      Autonetics & Missile Systems Division, Anaheim, California
      North American Aircraft Division, Seal Beach, California
      North American Aircraft Modification Division, Anaheim, California
      Collins International Service Company, Richardson, Texas
      Systems Development Center, Seal Beach, California
      Rockwell's 50 percent share of United Space Alliance, a joint
       venture with Lockheed Martin Corporation, Houston, Texas

The major product groups of the acquired divisions are:  ICBM systems;
tactical missiles; sensors; B-1B bomber; commercial aerostructures;
aircraft and helicopter modifications; rocket propulsion including the
Space Shuttle main engine; Space Station electric power; airborne laser
and electro-optics; Space Shuttle integration, logistics and
operations; Global Positioning System satellites; space defense and
advanced programs.

The Boeing Defense & Space Group encompasses virtually all of the
company's business with the U.S. Department of Defense, NASA and
international defense customers.  Defense and space programs include:
helicopters, military aircraft, advanced electronic systems, space
transportation and the International Space Station.  The Group is
organized into five divisions:  Information & Electronic Systems,
Missiles & Space, Helicopters, Military Airplanes and Product Support.

The Boeing Defense & Space Group had 1995 sales of $5.6 billion.  The
acquired Rockwell units had 1995 sales of $3.2 billion.

The new Boeing North American will report to Jerry King, president of
the Boeing Defense & Space Group.  Boeing North American will be headed
by John McLuckey, who is currently president and chief operating
officer of Rockwell's Aerospace and Defense businesses.

King said, "The capabilities of the Boeing and Rockwell organizations
are complementary, and the integration of our two organizations will
strengthen Boeing as a prime contractor and make us an even more
attractive teammate for joint venture opportunities.  We will
significantly enhance our capabilities in space systems, including
space transportation, satellite and space station programs, and
information/battle management systems.  We also gain additional
capabilities in the air vehicle area, where we will be an industry

The new Rockwell comprises:
  Rockwell Automation, Milwaukee, Wisconsin
  Rockwell Avionics and Communications
    - Collins Commercial Avionics, Cedar Rapids, Iowa
    - Collins Avionics & Communications Division, Cedar Rapids, Iowa
    - Communications Systems Division, Richardson, Texas
  Rockwell Semiconductor Systems, Newport Beach, California
  Rockwell Automotive, Troy, Michigan
    - Light Vehicle Systems
    - Heavy Vehicle Systems

Boeing and Rockwell are establishing transition teams to develop plans
for integrating the two companies' defense and aerospace businesses.
Condit and Beall said, "We are committed to making the integration of
these businesses as smooth as possible for the employees involved and
our customers."

The Boeing Company is the world's leading manufacturer of commercial
jet aircraft and one of the nation's top exporters.  Boeing had 1995
sales of $19.5 billion and projects 1996 sales of $22 billion not
including the effect of the merger.

The new Rockwell will be a global, diversified technology company
holding leadership market positions in automation, avionics,
communications, semiconductor systems, government communications and
automotive component systems with projected sales of approximately $10

CS First Boston is the financial advisor to Boeing and will act as its
agent with respect to Rockwell debtholder approval.   Morgan Stanley &
Co. and Dillon, Read & Co. Inc. are financial advisors to Rockwell.

Karl Swartz	|Home
Moderator of sci.aeronautics.airliners -- Unix/network work pays the bills