The boards of directors of Newport News Shipbuilding
(NNS) and Avondale Industries
have approved a definitive agreement to combine the two companies. The transaction creates a leading, broad-based shipbuilding company with estimated 1999 revenues of $2.6 billion and nearly 24,000 employees.
The combined company will be known as Newport News Avondale Industries.
"The combination of Newport News and Avondale brings together two highly skilled and tremendously capable shipbuilding companies
,'' said William P. Fricks, chairman and CEO of Newport News. "We believe the new company holds immense promise, and we expect to deliver measurable results in the form of higher returns for shareholders, enhanced value for our customers, and increased long term opportunities for employees.''
Albert L. Bossier, Jr., chairman and CEO of Avondale, said, "This merger is about building a stronger combined company. Avondale's experience in the construction of Navy and commercial surface ships complements
Newport News' strengths in aircraft carrier and submarine construction, refueling, and overhaul. Together, we can design, build, and maintain every ship in the Navy and USCG fleets.''
The transaction is subject to approval by the shareholders of both companies, U.S. regulatory reviews, and other customary closing conditions, with expected completion in the second quarter of 1999. It is anticipated the transaction will be accounted for as a pooling-of-interests.
"Newport News Avondale Industries will be the only shipbuilder in the U.S. with operations on the East, West, and Gulf coasts," said Fricks. "Our geographic diversity enhances the combined company's ability to deliver high-quality, cost-effective fleet maintenance services
to the U.S. Navy, and arguably makes us the most capable and flexible shipbuilder in the nation.''
There will be a five-person executive management committee of the combined company. Fricks will serve as chairman and CEO. Bossier will serve as vice-chairman while also retaining his position as president and CEO of Avondale. David J. Anderson will serve as senior vice -president and CFO. Thomas C. Schievelbein will be executive vice-president, as well as COO of Newport News. Thomas M. Kitchen will be executive vice-president, and will become COO of Avondale. Bossier and two current outside directors of Avondale will join the Newport News Avondale Industries board.
"Our funded contract backlog will total nearly $6 billion,'' said Fricks. "Total backlog, including options and planned funding, is nearly $8 billion.''
Newport News' backlog includes more than $2.5 billion for aircraft carrier construction, refueling, and life cycle maintenance extending through 2002. Submarine construction programs represent nearly $1 billion in funded backlog, with an additional $1 billion expected to be funded in the next three years.
Avondale's funded backlog of $2 billion includes design and construction of two LPD amphibious assault ships, which are the first of a 12-ship class to be built for the Navy. Avondale is also constructing a series of six RoRo transport ships for the Military Sealift Command, three crude oil carriers for ARCO Marine, a subsidiary of Atlantic Richfield, and is scheduled to deliver Polar Icebreaker WAGB Healy to the USCG in mid-1999.