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General Dynamics Fighter Unit Is Eyed by Lockheed

October 28, 1992|PATRICK LEE and RALPH VARTABEDIAN | TIMES STAFF WRITERS

Lockheed Corp. is considering buying General Dynamics Corp.'s massive jet fighter division, its partner in development of the Air Force's advanced F-22 fighter, a source familiar with talks between the two companies said Tuesday.

The Ft. Worth-based division accounts for about half of General Dynamics' net revenue, and analysts estimate that the unit could bring between $1 billion and $1.5 billion in a sale.

General Dynamics has also talked with Seattle-based Boeing Co., another F-22 contractor, about a sale or possible joint venture, according to a recent report in the Ft. Worth Star-Telegram.

Spokesmen for the three companies declined to comment.

Lockheed, based in Calabasas, is heading the multi-company team that is developing the F-22, the Air Force's next-generation tactical combat jet.

If Lockheed prevails in its effort to buy the General Dynamics division, it would control two-thirds of the contract. It would likely seek to manufacture the F-22 at its plant in Marietta, Ga., said Jack Modzelewski, an analyst at PaineWebber Inc. in New York.

Congress has not yet made a final decision on whether to fund production of the politically controversial F-22, the Pentagon's most expensive proposed weapons program.

"There's a strong ring of plausibility to it," said Cai von Rumohr, an aerospace analyst at Cowen & Co. in Boston. "Whether (a deal) actually happens, I think we'll see."

General Dynamics now builds the F-16 at its Ft. Worth plant. Any buyer of the division would get the F-16 production, but the plant is government-owned and probably would not be included in any deal, analysts said.

The division reported net sales of $2.29 billion for the first nine months of 1992, with $149 million in operating earnings.

After rising $3 on Monday, General Dynamics' stock closed down $1.875 a share to $98.125 Tuesday in trading on the New York Stock Exchange.

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