More Divestment News: GD to buy Jet Aviation

Not pertaining to divesting, per se, but still relevant. From the inbox:

General Dynamics to Buy Jet Aviation for $2.25 Billion, Good News for Wesleyan

It turns out Wesleyan’s bet on General Dynamics (NYSE: GD) is paying off. The Falls Church, V.A.-based defense and aerospace contractor is slated to purchase Jet Aviation, a highly lucrative Swiss air-services company for $2.25 billion before the year’s end.

According to the Wall Street Journal today, GD Chairman and Chief Executive Nicholas Chabraja expects Jet to report at least $1.5 billion in sales and $230 million in earnings next year.

The acquisition comes at crucial time for the defense company. Production of the billions of dollars worth of mine-resistant vehicles it sells to the Pentagon for use by U.S. and allied forces in Iraq will soon end amidst uncertainties over the growth rate of future U.S. defense spending.

Jet Aviation, controlled by European investment firm Permira, services high end luxury terminals that cater to customers who fly expensive private jets such as those made by GD’s Gulfstream unit. Despite the sagging U.S. economy, business-jet activity is expected to continue expanding globally, and Jet will help GD tap a fast-growing market abroad.

Word of the sale had no immediate impact on GD’s share price today, which hung around $91/share, but looming anticipation of the deal may explain the steady price increase GD has experienced since mid-July, when its stock bottomed out at about $81/share.

Speculation aside, the acquisition will surely free up significant cash flow for GD in 2008, which is good news for the company’s development and its investors.

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