Having bought IBM Corp’s Federal Systems Division less than two years ago, Loral Corp is offloading that, and most of the other defence electronics interests it has created and built up over the years, on Lockheed Martin Corp, in order to concentrate on space. Shareholders in Loral Corp will end up with $38 a share cash and one share in a new Loral Space & Communications Corp for each Loral they currently hold. Lockheed Martin, created only in September 1994 by the combination of Martin Marietta Corp with Lockheed Corp, is paying $9,100m all told for the interests it is acquiring, paying $7,000m cash and assuming $2,100m of debt. The enlarged Lockheed Martin will be about half the size of IBM Corp, having about $30,000m in annual sales and businesses spanning aerospace and defence electronics products. Loral Space will open for business with over $700m in cash and no debt. Loral chairman and chief executive officer Bernard Schwartz will be chairman and chief executive of Loral Space and will become vice chairman of Lockheed Martin, joining the board, and Lockheed will provide Loral Space with key technology support. Loral Space will consist of the Loral’s satellite and telecommunications businesses, essentially the former Ford Aerospace business of Ford Motor Co in which it now owns 33%, with European partners holding the rest; and Globalstar Telecommunications Ltd, the global satellite cellular phone consortium rallied by Loral, in which it now holds 31%. Lockheed Martin will take a 20% equity position in the new Loral Space company for $344m, an effective price of $7.50 per share. Lockheed Martin also filed a plan to build a rival to GlobalStar last year; since it will provide technical support to Loral Space, the plan for its own system is presumably abandoned.
