Aerospace -- Ge Sells Aerospace Unit

WASHINGTON - General Electric Co. has agreed to sell its aerospace operations to defense contractor Martin Marietta Corp. in a deal worth $3.05 billion, the two companies announced today.

The merger will make Martin Marietta the leading contractor in satellites and missile-defense programs.

The deal will nearly double Martin Marietta's annual revenues to about $11 billion from $6.1 billion in 1991, the companies said.

At a time when the defense industry is shrinking because of budget cuts, the deal likely will give Martin Marietta greater control over one of the brighter jewels in the Pentagon budget and add one of the most respected defense businesses to its portfolio.

"This agreement brings together two outstanding organizations to create an even stronger one and will have both immediate and long-term value," said a joint release issued by Norman Augustine, chairman and chief executive of Martin Marietta, and John Welch Jr., GE's chairman and chief executive.

"This merger will allow the new company to walk into the global arena as No. 1 in its industry, with twice the resources and a fraction of the overhead of the two companies that created it," Augustine and Welch said.

Under terms of the deal, GE will receive cash and $1 billion in convertible preferred stock in Martin Marietta, based in Bethesda, Md. Martin Marietta will support GE's nomination of two members to its expanded board of directors.

Martin Marietta and Fairfield, Conn.,-based GE said the deal has been approved by both companies' boards. It is subject to government review and Martin Marietta shareholder approval before completion, which is expected during the first half of next year.

GE's aerospace businesses complement two of Martin Marietta's key businesses, its missiles and electronics business in Orlando, Fla., and its astronautics and space division in Denver.

GE's aerospace division, based in King of Prussia, Pa., produces satellites, missile-guidance systems and warship-radar systems, and has the contract to help the Pentagon design the Star Wars, or Strategic Defense Initiative, system of orbiting spy satellites and space-based missiles intended to protect the United States from missile attacks.

With operations in King of Prussia, Philadelphia and Camden, N.J., GE is the largest private employer in the Philadelphia area.

Martin Marietta also is a leading player in Star Wars; it manages the Star Wars test-bed program in Colorado and is a finalist for two other key parts of the proposed system.