General Dynamics has reached an agreement to acquire Galaxy Aerospace for $330 million in cash. In addition, the selling parties may receive additional payments – up to a maximum of $315 million – through 2006 contingent upon the achievement of specific revenue targets.
Galaxy Aerospace is a joint venture, formed in 1997, of the Hyatt Corporation and Israel Aircraft Industries; it anticipates 2002 revenues of $635 million and operating income of $72 million. Galaxy is headquartered at Alliance Airport in Fort Worth, Texas; it has approximately 450 employees.
When the transaction closes, Galaxy will become part of General Dynamics’ Aerospace group, which includes Gulfstream Aerospace. The companies expect to close the deal next month.
In the transaction, General Dynamics will acquire two new product lines for its Aerospace group: the Astra mid-size twin turbofan business jet, and the Galaxy, the first aircraft in the super mid-size class, which entered service in January 2000, well ahead of its competitors.
General Dynamics will continue Galaxy Aerospace’s relationship with Israel Aircraft Industries. In this arrangement, both aircraft models will be assembled by Israel Aircraft Industries in Tel Aviv, Israel, and flown to Fort Worth in a ‘green’ configuration; General Dynamics will design and install custom interiors and all optional equipment.
Concurrent with the transaction, Executive Jet Inc., a Berkshire Hathaway company, has placed an order for 50 of the super mid-size Galaxy aircraft to be delivered over the next five years, with options for 50 more for its NetJets fractional aircraft ownership program. Total value of the order, options and maintenance services is approximately $2 billion.