(RTTNews) - Thursday, General Dynamics Advanced Information Systems, a unit of defense major General Dynamics Corp. (GD), announced a definitive agreement to buy Axsys Technologies, Inc. (AXYS) for $54 per share, valuing the transaction at about $643 million.

Falls Church, Virginia-based General Dynamics said it expects the proposed acquisition, which has been approved by both boards, to be earnings-neutral in 2009 and accretive to earnings thereafter. Subject to customary regulatory and shareholders approvals, the transaction is expected to close during the third quarter of this year.

With about 1,000 employees, Rocky Hill, Connecticut-based Axsys designs and manufactures precision optical solutions for defense, aerospace, homeland security, and commercial applications.

Commenting on the deal, Lou Von Thaer, the president of General Dynamics Advanced Information Systems stated, "Adding Axsys Technologies' capabilities to our existing intelligence, surveillance and reconnaissance expertise will enable us to further strengthen our portfolio of offerings and discriminators in the high-growth tactical ISR market."

On March 11, Axsys announced that it was evaluating a possible sale of the company. Affirming that its declining stock value peaked interests in potential buyers, Axsys hired investment-banking firm Jefferies & Co., Inc. to conduct a formal process to evaluate the level of interest.

On April 22, Axsys posted first-quarter net income of $7 million or $0.61 per share, a 37% growth compared to the $5.11 million or $0.45 per share reported in the year-ago quarter. Sales rose 18% to $66.59 million from prior-year quarter's $56.43 million.

Axsys operates in two segments - Surveillance Systems Group and Imaging Systems Group. Axsys had a backlog of $162.1 million as of March 28, 2009, and anticipates 2009 sales of $280 million. With the US government focused on improving surveillance and reconnaissance technologies, Axsys' two operating segments have seen steady growth.

Through the acquisition, General Dynamics anticipates expanding sensor, imaging and intelligence, surveillance and reconnaissance offerings to the U.S. government.

AXYS is currently trading up $3.02 or 6.04% at $53.02, while GD is trading down 15 cents at $58.44.

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