Alliant Techsystems Inc., the only supplier of solid-rocket motors for U.S. space shuttles, will buy a unit of Canada's MacDonald, Dettwiler and Associates Ltd. for Canadian $1.33 billion (U.S. $1.32 billion) to build complete satellite systems.
The purchase of MacDonald's information systems and geospatial information services group will be Alliant's biggest acquisition and its first outside the United States, Chief Executive Officer Daniel Murphy said in an interview Tuesday. The purchase will be complete by the end of March and will add to the profit at Alliant, based in Edina, Minn., starting in the 2010 fiscal year.
Alliant now will be able to build and operate full satellite systems as sales slow in its main business, which is supplying ammunition to the U.S. Army. The purchase completes a link for Murphy, whose four other acquisitions since taking over in 2003 included satellite-parts makers Swales Aerospace and PSI Group.
Alliant spokesman Bryce Hallowell said the acquisition likely would mean no immediate changes to the company's employment in Utah. ATK has nearly 5,000 workers at seven facilities in the state. They are involved in work on solid-fuel rocket launch systems, satellites and advanced composites.
The acquisition of MacDonald brings together launch and space systems that are "so complementary in nature that there's no overlap between the two businesses," Hallowell said. "We now have this tremendous new work force in Canada that will provide us with growth across both businesses. We would envision there would be something very strong for Utah down the line."
"What you'd normally see in an acquisition is synergies through reductions in employment," he added. "We don't anticipate that with this."
Richmond, British Columbia-based MacDonald is an information technology company that also builds robotic parts for the International Space Station. The unit being sold has 1,900 employees and estimated sales of $500 million for fiscal 2009. Alliant has "committed financing" for the purchase, Murphy said, without providing details.
Alliant fell $1.27 to $108.92 at 4:16 p.m. in New York Stock Exchange composite trading. The shares gained 45 percent last year. MacDonald fell 15 Canadian cents to Canadian $42.51 in Toronto before a trading halt. The stock dropped 2.5 percent last year.
The acquisition will put Alliant among the top five space- systems suppliers for the U.S. government and military along with Lockheed, based in Bethesda, Md.; Chicago-based Boeing Co.; Los Angeles-based Northrop and Raytheon Co., based in Waltham, Mass., Murphy said.
"This will better position us to move out on our own as a developer and integrator of small satellite systems," Murphy said.
The purchase will add payload products Alliant doesn't currently offer, including communications systems and a type of radar used for surveillance, as well as ground stations for controlling satellites, he said.
Alliant more than tripled sales to $3.56 billion last year from $1.08 billion in 2000 as it boosted output of ammunition for conflicts in Iraq and Afghanistan. Alliant quadrupled output of small-caliber cartridges for weapons including M-16 rifles to 1.4 billion rounds in that period.
Murphy has prepared for ammunition sales to slow as the war in Iraq winds down, by expanding revenue from spacecraft and related components. He said he's building the business to make smaller satellites as the U.S. Defense Department seeks to shorten launch times from more than five years currently to a matter of months.
To speed launches, the United States will be using more and smaller satellites with fewer capabilities on each spacecraft, he said.The MacDonald unit will form the base of a new business group that will be added to Alliant's three current divisions: ammunition; launch systems and mission systems, Murphy said.
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