October 6, 2004
EADS North America has entered the second phase of its U.S. development strategy with the acquisition of Racal Instruments – a test and integration market leader that will become part of the newly-formed EADS North America Defense Company.
Racal Instruments’ business and technology base, as well as its purchase price in the $100-million range, made it the perfect first acquisition for EADS North America, according to Chairman & CEO Ralph D. Crosby.
Speaking to journalists at an October 6 press conference in Washington, D.C., Crosby said the purchase of companies such as Racal Instruments is one of five core pillars for EADS North America’s growth. The other four are: consolidation, investment, partnership and performance.
EADS North America was incorporated two years ago as the U.S. holding company of EADS, and the first phase of its strategic development focused on integrating 11 wholly-owned EADS subsidiaries in America into the new organization. Since then, EADS North America’s business units have marked numerous competitive successes, including American Eurocopter’s newly-won $75 million contract to supply EC120 helicopters for the U.S. Customs and Border Protection Agency.
“As a result of the progress achieved so far, we were ready for the second phase of our evolution. We set the stage for this by creating the EADS North America Defense Company, a wholly-owned subsidiary that operates under a Special Security Agreement (SSA) to regulate the management of classified information,” Crosby said. “With the acquisition of Racal Instruments, we will build on EADS North America’s existing test businesses – primarily ARC and TYX – to obtain critical mass in the United States. In addition, this further strengthens EADS’ overall capabilities in the test and integration sector internationally.”
Racal Instruments has more than 320 employees worldwide, of which approximately 220 are at U.S. locations in Irvine, California (its headquarters) and San Antonio, Texas. An operation of Racal Instruments in the United Kingdom will report to an EADS entity in that country, Crosby said.
Addressing Racal Instruments employees at the Irvine headquarters following the acquisition announcement, EADS North America Executive Vice President and Chief Operating Officer David R. Oliver explained the opportunities created by this transaction. “The combination of EADS North America and Racal Instruments brings together the technology, market reach and global resources necessary to take us to a market leadership position in advanced test and services,” he said. “It also opens the door to expand our U.S. defense business. This is good news for us, and for our customers worldwide."
The business activity at Racal Instruments is centered on the design, manufacture, sales and service of electronic test and measurement equipment and systems. Key programs include digital/analog automated test equipment, jet engine test instruments and IFF (identify friend or foe) test systems.
With its initial acquisition now completed, Crosby said EADS North America’s goal is to further its position as an increasingly important player in the U.S. defense, paramilitary and civil markets. He noted EADS North America recorded a year-over-year organic revenue growth of approximately 8%, with sales volume so far in 2004 totaling more than $615 million.
