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BFGoodrich Will Buy Rohr for $1.3 Billion

Aerospace: Minimal job losses are seen. Analysts expect more such deals among second-tier defense firms.

September 23, 1997|KAREN KAPLAN | TIMES STAFF WRITER

One week after initial merger talks broke down, BFGoodrich Co. agreed Monday to acquire Rohr Inc. in a $1.3-billion deal that increases consolidation among the second tier of aerospace companies.

Chula Vista, Calif.-based Rohr makes engine accessories such as nacelles--the aerodynamic structures that surround an aircraft's engines--and the pylons that attach them to planes. BFGoodrich, based in Richfield, Ohio, manufactures and supplies a variety of systems and component parts for the aerospace industry, including landing systems and evacuation slides.

The deal calls for Goodrich to trade 0.7 share of its common stock for each share of Rohr stock. Based on its closing price Monday of $44.56 on the New York Stock Exchange, Goodrich would pay just over $900 million for Rohr, or $31.19 a share.

Rohr shares did not trade Monday but closed Friday at $30 on the NYSE, up $1.25. Goodrich shares fell 50 cents Monday before the deal was announced.

For the Record
Los Angeles Times Wednesday September 24, 1997 Home Edition Business Part D Page 3 Financial Desk 1 inches; 27 words Type of Material: Correction
Rohr Inc.--Laurence Chapman is senior vice president and chief financial officer of Rohr Inc., an aerospace firm in Chula Vista. His title was reported incorrectly in Tuesday's editions.

Goodrich would also assume about $400 million in Rohr debt. The deal is expected to be completed late this year or in early 1998.

At Rohr's headquarters just south of downtown San Diego, the mood Monday among the 4,500 employees was "a sigh of relief," said Laurence Chapman, the company's senior vice president and chief executive.

"This is not a situation where there's going to be lots of job losses," Chapman said of the deal, which would leave Rohr as an autonomous segment of Goodrich's aerospace group. "This is somebody pretty compatible with us, and it's somebody who's committed to the aerospace industry."

Both companies said the increasing trend toward consolidation inspired the deal, which was first proposed by Goodrich several months ago. A merger wave among top-tier firms has created a handful of aerospace behemoths, including Boeing Co., Lockheed Martin Corp. and Raytheon Co. Analysts are now expecting the consolidation tide to turn to smaller firms.

"As a larger company in an industry that continues to consolidate and become more highly focused, we will become an even stronger competitor," said David Burner, chairman and chief executive of Goodrich. Rohr will add 20 to 25 cents a share to Goodrich's earnings, he said.

Goodrich will continue to grow through additional acquisitions, Chapman said.

Wolfgang Demisch, an aerospace analyst with BT Securities in New York, said the two companies are logical partners that would be well-suited for competition in the increasingly competitive aerospace industry.

Rohr acknowledged on Sept. 11 that it was in talks to be acquired by an unnamed suitor in a $30.25-a-share deal, but those discussions ended four days later. Chapman would not say why the talks stopped last week or what brought the two companies back to the table over the weekend.

Rohr's board of directors approved the deal Sunday, and Goodrich's board gave its approval after the markets closed Monday.

On Friday, Rohr said it would buy Tolo Inc., a defense and aerospace contractor in Irvine, in an all-cash deal that sources said is worth $24 million.

Chapman said the Tolo purchase had no influence on the deal with Goodrich, although the latter was "aware of it and they were comfortable with it."

Times staff writer John O'Dell in Orange County contributed to this report.

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