Loral Signs Cash Deal to Acquire Ford Aerospace

Loral Corp., a New York-based defense electronics company, said Friday that it signed a definitive agreement to buy Newport Beach-based Ford Aerospace Corp. for $715 million in cash.

The purchase price is lower than industry analysts expected when Ford Motor Co. put the defense and communications subsidiary up for sale in January. But industry sources said Loral’s actual cost could be nearly $900 million if debt and other liabilities are included.

Ford announced July 23 that it had selected Loral as the winning bidder for its Ford Aerospace unit. Loral, in a joint venture with Shearson Lehman Hutton Inc., beat out competing offers from groups led by Hughes Aircraft Co. and Westinghouse Electric Corp.

The deal, which is subject to government approval, is expected to close within three months.

Bernard L. Schwartz, Loral’s chairman and chief executive, said Loral, as part of the deal, will assume $20 million in short-term debt and commit about $160 million in employee benefit obligations. But he said those liabilities will be balanced out by other assets, which include an overfunded pension plan for Ford Aerospace’s 17,000 employees.

Ford reportedly had sought cash bids of $1.2 billion when it put the defense unit up for sale in January. But the bids came in much lower as prospects for the defense industry grew bleaker with the melting of Cold War tensions.

Ford said the deal was not subject to any financing conditions.