Finmeccanica to buy DRS for $5.2 billion

By Paolo Biondi and Robin Pomeroy

ROME (Reuters) - Italy's Finmeccanica SpA reached a $5.2 billion deal to buy DRS Technologies Inc. securing itself a bigger presence in the growing U.S. defense market which accounts for half the world's military spending.

Finmeccanica, Europe's fourth largest aerospace and defense group, said it would pay $81 cash per share to acquire the whole Parsippany, New Jersey company. The bid also includes around 1.2 billion in net debt.

The cash price offers a premium of 32 percent over DRS's thirty days average stock price, the companies said in a joint statement, adding that the group plans to delist DRS.

DRS will operate as a wholly-owned subsidiary, maintaining its current management and headquarters with a board comprised predominantly of U.S. citizens holding security clearances that will allow it to comply with security requirements, the statement said.

"Today's transaction is a perfect fit," said Pier Francesco Guarguaglini, chairman and chief executive officer of Finmeccanica. "The merger furthers Finmeccanica's tradition of investing in the U.S. and supporting the American warfighter with superior technology and value."

DSR supplies products such as radar and surveillance to military forces and intelligence agencies. The deal has been approved by the two board of directors but still requires approval by regulatory bodies.

It will be financed by an initial loan to be repaid via a capital increase, a bond issue and asset sale, including a stock market floatation of its Ansaldo Energia unit which produces thermoelectric power plants.

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