BAE Systems Close To Buying Armor Holdings - WSJ

Armor Holdings, which produces a diverse array of defense products, including the special armored lining for the humvee that has become ubiquitous in U.S. military operations in Iraq, has been approached for buyout by British defense contractor BAE Systems. With the U.S. military looking to replace thousands of humvees in the coming years and BAE eying an increased role in the lucrative U.S. defense industry, BAE has offered Armor Holdings' shareholders $88 a share, or a roughly 7% premium to the company's closing price Friday of $82.15. As of Sunday night, sources told the Wall Street Journal that while the deal was in 'final preparations' mode, it could still fall apart. Friday, shares of Armor Holdings climbed $4.46, or 5.74%, on a Prudential Equity analysts upping his price target from $72 to $80, on expectations Armor holdings would win a contracts to build Mine Resistant Ambush Protected vehicles for the military for an estimated cost of $8.4 billion. Armor's total revenue in FY2006 was just under $2.4 billion. Though a relatively small player in the U.S. defense industry, Armor's stock performance underscores the explosive growth the industry has experienced since the U.S. invaded Iraq in 2003. From a share price of under $10 in 2003, it's shares have increased to upwards of $80 in a period of four years.

Sources: Wall Street Journal, AP, Reuters, MarketWatch
Commentary: Armor Holdings Right Back Where it Began • Ceradyne's Armor Outshines the Rest • Cramer's Take on AH
Stocks/ETFs to watch: BAE Systems PLC (BAESY.PK), Armor Holdings (AH). Competitors: Force Protection (FRPT), Lockheed Martin (LMT), General Dynamics (GD). ETFs: PowerShares Aerospace & Defense (PPA), iShares Dow Jones US Aerospace & Defense (ITA), iShares Morningstar Small Core Index (JKJ)
Related: Humvee Fact Page

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Comments

[dcappe10:]

Defense stocks are certainly rising as our continuing right on terrorism continues. I recommend this article to anyone not quite clear about the role Defense stocks play in our country.

www.pennysleuth.com/rp...

Cheers!

2007 Jun 28 04:34 PM