Italian defence giant Finmeccanica acquires US-based DRS Technologies for $5.2 billion

13 May 2008

Italy's biggest defence company, Finmeccanica SpA, has bought US military-electronics manufacturer DRS Technologies Inc. in a deal estimated to cost it around $5.2 billion, including taking on the latter's $1.2 billion debt.

This price is quite a premium to the $3 billion that the Italian major was expected to pay when news first broke on the proposed acquisition. (See: Italy's Finmeccanica looking to buy US defence electronics contractor DRS Technologies for $3 billion)

Amongst all the recent deals undertaken by European defence contractors to get a strong foothold in the US, the largest arms market in the world, this is the biggest.

DRS is No. 69 among US defense contractors by dollar value of Pentagon work on which it is the main contractor, with $478 million in 2006, according to US Defense Department figures. American defence spending will rise 7.5 per cent to $515 billion in fiscal 2009, the 11th consecutive increase, based on a funding request that President George W. Bush sent to Congress on 4 February.

Britain's BAE Systems Plc has been one of the overseas companies to take the lead in acquiring US firms, and bought armoured vehicle maker United Defense Industries Inc. for $4.2 billion in 2005 followed by the acquisition of body armour and truck maker Armor Holdings for $4.1 billion in 2007.

Rival European Aeronautics Defense and Space (EADS), the parent of Airbus, bought emergency response firm PlantCML for $350 million in April.