Falls Church-based General Dynamics said last week it has agreed to buy a company that makes blast-resistant vehicles, part of a strategy to grab potential maintenance and repair work as defense spending on new equipment slows.
General Dynamics said it is set to pay $5.52 per share of stock or about $360 million for Force Protection of Summerville, S.C., in the transaction, which is expected to close by the end of the year. The manufacturer is best known for its Cougar and Buffalo armored vehicles, which the military began buying en masse in 2007 as casualties and injuries as a result of improvised bombs surged in Iraq.
The military now has thousands of what it calls Mine Resistant Ambush Protected vehicles, able to ward off the effects of roadside bombs. Force Protection alone provided the U.S. military with more than 3,000.
The military “will be looking for modifications,” such as improving the vehicles’ technological capabilities and making them lighter, said Peter Keating, a spokesman for General Dynamics’s land systems unit.
He noted that the acquisition complements the firm’s existing business building the Abrams tank and lighter Army vehicles such as the Stryker.
The purchase “expands [the GD] portfolio down into MRAP,” said Keating. “With this 3,000-vehicle ... market, there’s going to be service, support and opportunities to improve that fleet.”
Force Protection produces several other vehicles, and has also sold its trucks to the Iraqi and British militaries, according to General Dynamics.
For General Dynamics, the year has proven to be a busy one for acquisitions. The company recently closed on its purchase of Norfolk-based Metro Machine, a surface-ship repair business that works with the Navy. It also paid nearly $1 billion for Arlington-based Vangent, a federal contractor that specializes in health care services. The company has said the latter buy complements its 2008 acquisition of Towson-based ViPS, which focuses on back-office health IT systems like fraud detection software.
General Dynamics, like many other large contractors, has said that it is focusing on building up areas where it expects growth. Sustainment and repair work as well as health IT are widely considered potential growth spots.
“We are divesting those businesses that are no longer core to our portfolio and identifying areas in our business where acquisitions would shore up our outlook or improve our competitiveness in faster growing market channels,” said Jay L. Johnson, the company’s president, chairman and chief executive, in his most recent call with investors.