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Defense contractor to buy California Microwave division

March 13, 1999|By BRENDAN KIRBY

Northrop Grumman Corp., a giant defense contractor, has agreed to buy the spy-plane division of California Microwave Inc., but a Northrop spokesman said the deal should have no immediate impact on the Hagerstown plant.

The sale, which still must be approved by government regulators, will allow California Microwave to concentrate on wireless communications technology and will give Northrop control of a competitor with a niche market.

Northrop officials said it is premature to say what will happen to the Hagerstown plant at Top Flight Air Park or the facility's 110 employees. But Northrop spokesman Jim Taft said the company plans no layoffs.

"We don't expect any changes at this time," he said. "The employees and the management are intact. The facilities are intact."

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Under the agreement, Northrop will pay $93 million for the Information Systems Division, which employs about 480 people. Northrop will pay an additional $5 million next year if certain revenue goals are met.

In addition to the California Microwave plant near Hagerstown Regional Airport, Northrop will acquire other Maryland offices in Baltimore, Annapolis Junction and Belcamp, and one in Woodland Hills, Calif.

The Hagerstown plant modifies standard commuter planes with high-tech surveillance equipment used by the U.S. Army.

With the deal, Northrop also will get the California Microwave name. It will be called the California Microwave element of its Electronic Sensors and Systems Sector based in Baltimore.

The rest of the company that Northrop did not buy, meanwhile, will be renamed Adaptive Broadband Corp. effective April 29.

The Sunnyvale, Calif., company said it will use profits from the sale to pay off short-term debt and buy back some of its own stock.

Stephanie Day, a spokeswoman for the company, said the firm wanted to sell its defense business so it could focus on high-growth areas like satellites, terrestrial data radios and other wireless products.

"The defense business is very good, but we felt we needed to concentrate on Internet protocol," she said.

The California Microwave name should help Northrop, according to officials from both companies.

"The name has a very strong presence in the intelligence community," Day said.

Northrop officials said they have focused on large-scale projects for the Navy. California Microwave, meanwhile, has specialized on smaller planes and helicopters with more specific missions, mainly for the Army.

"California Microwave is a strong competitor in its niche markets and has unique capabilities that will strengthen our expertise in airborne surveillance, particularly in the tactical area, and broaden our business base," Kent Kresa, chairman, president and chief executive officer of Northrop, said in a statement.

Before the deal is finalized, officials from the Defense Department, and either the Justice Department or the Federal Trade Commission, must review it.

Northrop officials predicted approval will come next month.

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