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Author: wolfeman Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 294  
Subject: SOLD!!!! Date: 5/17/1999 6:56 AM
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General Dynamics has agreed to buy GAC for $71.44

http://investor.msn.com/news/pressrel.asp?Symbol=GAC

There's your sixty buck guamfool.

Price should quickly run to the acquisition price.

wolfeman
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Author: wolfeman Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 283 of 294
Subject: Re: SOLD!!!! Date: 5/17/1999 8:00 AM
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What are we gonna do guys? Should we take the General Dynamic stock. It's a one for one swap. GD has been moving up nicely, but it is more richly valued than GAC and is not growing as fast. It has gone down a little bit lately so we may get quite a better price than $71 dollars if GD goes back to the trend it has been on for some time. I don't have any other stocks in the defence business and don't know how good a sector it may be. Let's share some ideas.

wolfeman

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Author: FoolishFlyer Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 284 of 294
Subject: Re: SOLD!!!! Date: 5/17/1999 1:07 PM
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Should we take the General Dynamic stock.

I was debating whether to hold GAC or sell in favor of a better stock. Looks like this deal answers my question. I'll put in a limit sell in the high 60's.

General Dynamics merged with Lockheed earlier in the decade. Currently they make the F-16, which just celebrated it's 25th year in the U.S. Air Force. The Joint Strike Fighter is slated to replace the F-16 in the next century. Lockheed/GD is fighting Boeing for the multi-billion dollar contract to build JSF's for the Navy, Air Force, Marines and Royal Navy. This has the potential to be a make-or-break contract. The winner rakes in profits, the loser gets scraps from subcontracts. Another Lockheed/GD product is the F-22 Raptor. This should keep the company going for the next 20 years.

GD also brings to the mix its Electric Boat Division, which makes the Navy's fast-attack and ballistic missile submarines--namely the Los Angeles class, Ohio class and Seawolf class boats.

I don't see much growth in Electric Boat. On one hand, their only competitor for building nuclear ships is Newport News Shipyards. On the other hand, the Navy is decommissioning the older LA class subs, the Ohio contract is finishing up, and the Seawolf is the submarine the Navy ultimately didn't want. (They were designed for blue water, cold war, Soviet submarine hunting. The strategy is now focused on "littoral" operations--supporting the war by striking from coastal waters. That makes nuclear subs very expensive missile carriers.)

Electric Boat won't die. The Navy won't let that kind of expertise go away. They're already looking for the next century nuke sub. But, it's only on paper. Probably be at least another four to five years before they cut steel.

If you're looking for growth, it isn't at Lockheed/GD. Value maybe, but mainly because, in the spirit of competition and redundancy, the Feds want at least two contractors available to build their war toys.

Anyway, I think when the price is right I'll sell out and put it in tech. Hmmm...Yahoo!?

Dave

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Author: wolfeman Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 285 of 294
Subject: Re: SOLD!!!! Date: 5/17/1999 8:27 PM
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FoolishFlyer:

Well, you know your military stuff. The chart on GD looks durn good. Trouble is it now has a pretty high PE for that business and as you say a "slow grower". After the run they have seen, I can't imagine there is much more left.

I think I'll hang on and see if GD can regain the 70s as it took a hard hit on this news. I really thought it wouldn't since GAC is so profitabe. I thought GE would gain a few dollars giving us a great arbitrage spread. I still think if the market gives us a break we can get 73 bucks for GAC.

One reason I was thinking of holding GD for a little while is the crash season comming up and if I can hold on till Oct. I can make this a long term gain. I thought they may have some downside resistance, but they showed today they don't. GAC has a better PE and a higher growth rate.

wolfeman

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Author: LongCall Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 286 of 294
Subject: Re: SOLD!!!! Date: 5/17/1999 9:20 PM
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Hey, just had to pop back in here on the buyout news today! Congrats to all GAC longs!!!

I think along time ago I told you guys GAC would see $60 plus! It finally happened! Congrats again and best regards to all,

- LongCall

P.S. If anyone is interested, I'm hanging out with HS once again, which looks real good here for the patient...

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Author: FoolishFlyer Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 287 of 294
Subject: Re: SOLD!!!! Date: 5/18/1999 3:33 PM
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I think I'll hang on and see if GD can regain the 70s as it took a hard hit on this news. I really thought it wouldn't since GAC is so profitabe. I thought GE would gain a few dollars giving us a great arbitrage spread. I still think if the market gives us a break we can get 73 bucks for GAC.

Kind of like a reverse Boeing/McDonnell-Douglas deal. In other words, Boeing bought McD for their military and defense divisions to smooth out the ups and downs of Boeing's commercial air group. Lockheed/GD bought GAC to offset the slowdown in their defense divisions.

Anyone know when the one-for-one stock exchange will take place? Trying to decide whether to sell GAC before the exchange (I'm guessing they'll peak at around $70) or wait for the exchange and sell GD. I know their business and I don't see the growth in GD that I can get elsewhere. Unfortunately, the TA is beyond me.

Dave

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Author: wolfeman Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 288 of 294
Subject: Re: SOLD!!!! Date: 5/18/1999 4:06 PM
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Dave:

I have been watching and have not seen a time specified, even a tenative one. This leaves me to believe that a settlement date has not been set. These things always take a few months at the very lease. I'm sure we'll know well in advance.

wolfeman

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Author: FoolishFlyer Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 289 of 294
Subject: Re: SOLD!!!! Date: 5/18/1999 7:57 PM
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wolfeman,

Thanks for the info. See you on the Dell boards.

Dave

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