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Boeing buying Rockwell units
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August 1, 1996: 11:32 a.m. ET
Aerospace giant to pay $3.2B for Rockwell's defense and space units
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NEW YORK (CNNfn) - The Boeing Co. on Thursday said it reached a definitive agreement to buy Rockwell International Corp.'s defense and aerospace units for about $3.2 billion in stock and debt.
In the latest move toward consolidation in the aerospace and defense industry, Boeing agreed to issue $860 million in common stock and retain $2.165 billion in Rockwell's debt along with certain pension obligations.
"The assets and capabilities we are acquiring are an extremely good strategic fit with our long-term objective of creating shareholder value," Boeing President and Chief Executive Officer Philip Condit said in a statement. "This merger accelerates us on our way to achieving our 20-year vision, which calls for Boeing to be a fully integrated aerospace company."
The Rockwell units will become a wholly- owned subsidiary of Seattle-based Boeing and will be called Boeing North American Inc., adding roughly 21,000 workers to Boeing's current defense and space workforce of 30,000.
Rockwell's defense and aerospace units are expected to add $3.2 billion in annual sales to the Boeing Defense & Space Group's current annual sales of $5.6 billion.
Condit said there would be some job reductions due to overlapping positions, but added he does not see a need for major cuts. His plan is to eventually expand the operations.
The remainder of Rockwell - including automation, avionics, communications, semiconductors systems and automotive components businesses - will be transferred to a new company that keeps the Rockwell name, and will remain in Seal Beach, Calif., Shares in the new Rockwell will be distributed on a one-for-one basis and listed on the New York Stock Exchange.
The deal requires shareholder and regulatory approval.
Rockwell Chairman and Chief executive Officer Donald R. Beall said the decision to sell the defense and aerospace businesses fit with a shift in his company's strategic focus to electronics manufacturing that provides higher growth.
Beall said the new Rockwell will be virtually debt-free and positioned to make investments in its remaining businesses. "This is an historic step in the continuing transformation of Rockwell," he said. 
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