PeterGibbons
Joined: 08 Jan 2006
Posts: 128
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 Posted: Mon Feb 27, 2006 10:03 pm Post subject: Auction for Maker Of Military Trucks Is Nearing an End |
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Auction for Maker Of Military Trucks Is Nearing an End
The Wall Street Journal
February 27, 2006; Page A2
Stewart & Stevenson Services Inc. yesterday was in the final stages of an auction that could soon put the 104-year-old maker of military trucks into the hands of a new owner, people familiar with the matter said.
With a market capitalization of nearly $800 million, shares in the Houston-based company have nearly tripled since 2003, when the U.S.-led invasion of Iraq created increased need for the company's line of military trucks. Those trucks do the unglamorous but essential work of a military campaign: hauling cargo and garbage, and towing other military vehicles. The company also markets the Mercedes-Benz military vehicle, called a Gelaendewagen, or G-Wagen, to government buyers.
Through the 12-month period ended last October, the company notched sales of $1.3 billion and net income of $32 million. It employs about 3,600 people. The company has been exploring merger opportunities for some time, the people familiar with the matter said, and could wind up the auction soon. It is still possible that no deal may come together. Requests for company comment weren't returned last night.
A number of buyers could be interested in the firm, including traditional military contractors and industrial truck-makers Oshkosh Truck Corp. of Oshkosh, Wis., and Textron Inc. of Providence, R.I. Another potential buyer is Lockheed Martin Corp., of Bethesda, Md.
Officials at Oshkosh couldn't be reached for comment last night. Textron declined to comment.
Lockheed, whose longstanding strength is combat aviation and space, has branched out recently into ground vehicles. Already this year, Lockheed has acquired a military ground-vehicle maker in Britain and was chosen by the U.S. Army as one of two companies to build a prototype of a future tactical utility truck. In that competition, Lockheed beat out Stewart & Stevenson and AM General LLC.
Lockheed spokesman Tom Jurkowsky said the company doesn't comment on potential acquisitions or divestitures.
In a recent interview, Robert Coutts, head of Lockheed's electronic-systems unit, likened the company's move into ground vehicles to forays into other nontraditional markets: Lockheed has won high-profile contracts to develop and integrate the U.S. presidential helicopter and a small, swift warship. Rather than experience in helicopters, ships or trucks, he said, Lockheed brings expertise in program management and systems engineering. "Can we systems-engineer [a vehicle] better than the average truck company? The truth of the matter is, we can compete with them," Mr. Coutts said.
In New York Stock Exchange composite trading Friday, Stewart & Stevenson shares were up 13 cents $27.10.
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Peter Gibbons
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