The Boeing Co. announced Wednesday it will buy system surveillance and combat company Argon ST for about $775 million.
The purchase of the combat engineering firm in Fairfax, Va., appears to reflect a shift by defense contractors seeking to accommodate a Pentagon that now wants high-tech intelligence tools as much or more than big guns and heavy armor, analysts say.
The Pentagon is cutting some big weapons meant for conventional wars out of the budget while it shops for technology better suited to fight against shadowy insurgent groups in places like Iraq and Afghanistan.
Argon ST makes reconnaissance equipment mounted on planes, sensors meant to warn of an approaching enemy and special sights to help troops locate snipers in urban warfare.
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Boeing’s defense unit CEO Dennis Muilenburg said Argon will “significantly accelerate our capabilities in sensors, communications technologies and information management.”
Boeing gets roughly half of its revenue from government defense, space and security contracts. It makes fighter jets, cargo planes and is expected to compete against Airbus parent European Aeronautic Defence and Space Co. for a $35 billion contract to build a new fleet of refueling jets.
Boeing Co. employs more than 72,000 at plants in the Puget Sound region.
Defense Secretary Robert Gates has canceled a number of big contracts in recent years. That includes breaking up a huge Boeing contract last year to oversee of construction of new armored vehicles and other battlefield hardware for the Army.
Gates has begun to focus on smaller weapons, like precision missiles, unmanned planes that can snoop on insurgents, and special forces.
The technology and strategy is intended to aid U.S. forces engaged in counterinsurgencies that they face in rough terrain of Afghanistan, urban zones like Baghdad, and elsewhere.
A host of companies that could be buyout targets saw shares rise Wednesday. Shares of rival Applied Signal Technology Inc. rose more than 7 percent.
Boeing’s offer of $34.50 per share is a 41 percent premium to Argon’s closing price on Tuesday. Argon said its board has approved the takeover and plans to recommend it to shareholders.
The deal is expected to close in the third quarter. Once acquired, Argon will be a standalone subsidiary.
Argon had $366 million in revenues during the 2009 fiscal year, has about 1,000 employees and operates in several states. The company’s chief executive officer, Terry Collins, was the largest shareholder with a 12.4 percent ownership stake as of a company regulatory filing in January.