Rockwell, Boeing Agree on Terms for Sale of 2 Units

Rockwell International Corp. said Friday that it expects to complete the $3.2-billion sale of its aerospace and defense operations to Boeing Co. next Friday.

As part of the deal, announced in August, Seattle-based Boeing will issue 9.19 million new shares of common stock.

Shareholders of Seal Beach-based Rockwell will get an equivalent amount of stock in the new Rockwell company plus 0.042 share of Boeing common stock for each current Rockwell share. That means a stockholder with 100 Rockwell shares will get 4.2 Boeing shares.

About 24% of Rockwell’s common stock is held by the company’s employees, mainly through the 401(k) plan. Rockwell has about 80,000 employees, of which 20,000 work at aerospace and defense.

Under the agreement to buy Rockwell’s space and defense businesses in stock and debt, Boeing agreed to issue $860 million of new stock for the purchase.

The exchange ratio is based on Boeing’s average daily closing price of $94.305 for the latest 20-trading-day period and on about 219 million Rockwell shares outstanding.

Boeing’s stock closed Friday at $99.375, down 25 cents on the New York Stock Exchange. Rockwell was unchanged at $64.25.

Rockwell’s shareholders are scheduled to meet Wednesday to approve the sale. The shares are expected to be distributed Friday, when the acquisition is completed.

Just before the sale, Rockwell will transfer its automation, avionics, semiconductor and automotive businesses to a new company that will retain the Rockwell name. Trading in the new Rockwell shares is expected to begin Monday on the NYSE.

Rockwell’s revenue for its fiscal year ended Sept. 30 totaled $14.1 billion, of which about $3 billion came from the defense and aerospace businesses it is shedding. For that fiscal year, Rockwell reported a profit of $726 million, about 24% from defense and aerospace and other discontinued business units.