The acquisition of the General Dynamics space division will strengthen Orbital Sciences' pursuit of contracts for larger government satellites, according to senior company officials.

Examples of General Dynamics-built satellites. Credit: General Dynamics

"This acquisition represents a major strategic development for Orbital," said David Thompson, Orbital chairman and CEO. "Simply put, it will allow us to substantially accelerate our already strong growth in the national security space systems market, and also broaden our involvement in such civil government space applications as Earth science, weather forecasting, climate monitoring and astronomy missions."

Orbital Sciences announced last week it was purchasing the satellite manufacturing unit of General Dynamics. Orbital is paying $55 million in cash, and officials expect to close the deal by early April, according to Garrett Pierce, Orbital vice chairman and chief financial officer.

Orbital leaders said the acquisition will add about $50 million in revenue this year, plus up to $100 million to the company's bottom line in 2011.

Thompson called the agreement a "compelling strategic fit" in a Friday conference call with investment analysts.

The addition of the General Dynamics spacecraft manufacturing unit will bolster Orbital's chances of winning up to $1.5 billion in new government satellite contracts.

"As we look out over the next 18 months, there are six or seven identified pursuits that this transaction will, I believe, significantly strengthen our competitive position in pursuing," Thompson said. "They are fairly well balanced between civil government opportunities with NASA and NOAA, and national security opportunities."

Thompson said Orbital would not have held a high chance of winning, or even pursuing, the contract opportunities made possible by the General Dynamics acquisition. The half-dozen pursuits Thompson discussed would have been "a bit of a stretch" for Orbital before the General Dynamics purchase.

Officials did not mention specific contracts that are now in Orbital's reach after last week's announcement.

General Dynamics' space business includes a collection of satellites for civil government, national security and commercial imaging customers. The division traces its roots to Spectrum Astro, an independent company purchased by General Dynamics in 2004.

Recent General Dynamics spacecraft include the Fermi gamma ray space telescope, the commercial GeoEye 1 Earth observation satellite, and the NFIRE experimental missile defense satellite.

Artist's concept of the Landsat Data Continuity Mission satellite. Credit: General Dynamics

The Landsat Data Continuity Mission, scheduled for launch in 2012, is also being developed and manufactured by General Dynamics. The company is also a contractor for several classified programs, according to Michael Hamel, Orbital's senior vice president of corporate strategy and development.

The average mass of General Dynamics satellites is about four times larger than typical Orbital spacecraft built for low Earth orbit, according to Hamel.

"As a result, the combination of Orbital's existing and acquired spacecraft platforms will give us market-leading products across a full spectrum of [the] small to medium-class range for low Earth orbiting satellites," Hamel said.

Thompson said the General Dynamics acquisition would save Orbital up to $30 million in investment and two years of work required to develop similar capabilities in-house.

"This represents an opportunity for Orbital to immediately establish a fairly strong presence in the medium segment without the time and [research and development] expense of creating such a product line on our own," Thompson said.

Orbital will also add General Dynamics' 325-person workforce and take control of a 135,000-square foot production facility in Gilbert, Ariz.

"It will address our mid- and long-term manufacturing capacity needs for larger satellites in both government and commercial markets, while also adding an experienced team of top-notch engineers and program managers with high-level security clearances to help us address both immediate and longer-term market opportunities," Thompson said.