General Dynamics announces plans to buy Spectrum Astro - East Valley Tribune: Business

General Dynamics announces plans to buy Spectrum Astro

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Posted: Thursday, March 18, 2004 10:00 pm | Updated: 4:41 pm, Thu Oct 6, 2011.

A home-grown Gilbert company that has made a name for itself in the high-prestige space business is being sold, but it will remain under local management.

General Dynamics announced plans Thursday to buy Spectrum Astro and merge it with the company's C4 Systems unit based in Scottsdale. A General Dynamics spokesman said no layoffs are planned.

“Actually, we hope all will remain,” spokesman Rob Doolittle said, referring to Spectrum Astro employees.

C4 Systems produces command, control and secure communications systems that help military commander direct battlefield operations. Increasingly those systems are being placed on satellites, which makes Spectrum Astro's space capabilities a good fit for the division, the companies said.

"This acquisition expands our offerings to an important portion of our customer base, complements our existing business . . . and helps broaden our presence in the missile-defense and key NASA space business segments through Spectrum Astro's existing relationships," said Mark Fried, president and general manager of C4 Systems, in a statement. He added that "Spectrum Astro has achieved remarkable growth over the past 10 years based on innovative systems engineering and lean, efficient manufacturing processes.”

The transaction has been approved by boards of directors of both companies but still is subject to government regulatory approval. The companies said they expect the deal to close within 60 days. The purchase price and other terms were not disclosed. As part of the deal, General Dynamics will acquire a new $37 million satellite assembly and testing plant that Spectrum Astro opened in February at Elliot and McQueen roads in Gilbert. Dubbed the “Factory of the Future,” it is the most modern plant of its type in the nation, according to Spectrum officials. Doolittle declined to comment specifically on the factory but said “we think Spectrum is a high quality company with excellent facilities.”

Privately held Spectrum Astro was started by W. David Thompson at his Los Angeles home in 1988 with just $5,000 in cash, a credit card and soaring ambitions to become a factor in America's space program. His idea was to fill a market niche for small, low-cost satellites that would be attractive to the government in an era when the Cold War, and the need for expensive satellites, was winding down.

In 1992, he moved the company to Gilbert because it was a less expensive place to do business. In Gilbert the company has grown quickly, developing scientific and research satellites for NASA and the Department of Defense. Also it is subcontractor to Northrup Grumman on a portion of the nation's ballistic missile defense system. Last June, Thompson publicly announced the company was for sale because some of the original investors wanted to receive cash for their stock.

At that time, Thompson said an alliance with a larger aerospace company would allow Spectrum to compete for larger government satellite projects. More than a dozen companies expressed interest in buying Spectrum, he said. Thompson was not available for further comment Thursday, but officials said Thompson will remain as a consultant to General Dynamics.

“We look at this as a very positive move for us because it will enable us to grow and compete for major programs,” said Spectrum spokesman Mike Greenwood. “And we will have access to special talent pools at General Dynamics.”

Spectrum is in the midst of developing several projects including a satellite for NASA that will observe high-energy gamma ray bursts in space and two that will demonstrate new technologies for the Department of Defense. Also the company has submitted a bid for a military space surveillance satellite.

General Dynamics' Doolittle said it's “too early to speculate” on whether Spectrum Astro will maintain a separate identity within General Dynamics or if the Spectrum Astro name will be retained. However, he said Spectrum will be managed from the company's Scottsdale offices.

General Dynamics came to Scottsdale in 2001 when the company purchased the government electronics operations of Motorola Inc. The Scottsdale complex at 8201 E. McDowell Road became the headquarters for the C4 Systems division in November.

The division employs about 3,100 people in Scottsdale and is adding several hundred more employees, primarily software and systems engineers. Local officials said the announcement appears to be good news for the East Valley and the local economy.

“They are a home-grown outfit, and we're proud of them,” said Gilbert Mayor Steve Burman, referring to Spectrum. “With General Dynamics, they will be able to go to the next level.”

The only downside for Gilbert would be if General Dynamics moves some Spectrum Astro employees to Scottsdale, he said, but he added “the factory isn't going anywhere.” Roc Arnett, president of the East Valley Partnership, an economic development group, said the deal could have a huge impact.

“I am convinced they (Spectrum Astro officials) will have the backing of a much larger player with deep pockets, and with that and the very strong talent base Spectrum Astro has, they will do additional phenomenal things,” Arnett said.

He said Thompson has been able to attract well-qualified employees by offering good pay and benefits, and “that is an asset General Dynamics will want to keep.”

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