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United Defense bought

August 27, 1997

CAMP HILL, Pa. (AP) - An investment firm headed by former U.S. Defense Secretary Frank Carlucci has agreed to buy military vehicle maker United Defense L.P. for $850 million.

The deal, announced Tuesday, would put the joint venture of FMC Corp. and Harsco Corp. in the hands of Carlyle Group, which is based in Washington, D.C., and has other holdings in the defense industry.

United Defense was formed in 1994 by FMC, a Chicago-based manufacturer of heavy machinery, and Harsco, an industrial services and products company headquartered near Harrisburg, Pa.

A production division of United Defense is located at Letterkenny Army Depot in Chambersburg, Pa., where Paladin howitzers, cannon-type weapons used to fire projectiles at relatively high angles, are manufactured.

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"We believe, based on the preliminary information we've received, that this should bode well for southcentral Pennsylvania," said Michael Ross, president of the Franklin Area Development Corp.

FMC owns 60 percent of United Defense and is managing general partner; Harsco owns the remaining 40 percent. The joint venture is based in Arlington, Va.

The sale is expected to close within 90 days.

FMC said the sale would allow it to increase earnings ``in today's environment of fewer defense dollars and continuing consolidations'' in the industry.

United Defense combined FMC's defense systems group with Harsco's combat systems division. It had sales of $1 billion in 1996, supplying ground combat systems such as the Army's Bradley Fighting Vehicle.

Carlyle managing director William E. Conway Jr. said the firm is ``excited about the prospect of helping to make the future of United Defense as great as its past.''

Carlucci, Carlyle's chairman, was defense secretary in the Reagan administration, from 1987 until 1989. He also was an assistant to the president for national security affairs.

The Wall Street Journal reported last week that General Dynamics, which makes tanks and is a Navy contractor, was prepared to offer $1 billion for United Defense.

Staff writer Lisa Graybeal contributed to this story.

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