LONDON FIRM TO BUY TRACOR, RETAIN WORKERS.

Byline: Daily News Staff and Wire Services

A British firm has agreed to buy Tracor Inc., which in the Antelope Valley employs more than 300 workers modifying jets into target drones in Mojave and assembling wings for Boeing 717 airliners in Palmdale.

London-based General Electric Co. Plc., which is unrelated to the U.S. company with the same name, said it intends to keep Tracor's aerospace segment intact under its same president.

``This is really a good bit of news for us,'' said Don Sullivan, Tracor Flight Systems general manager for the 717 operations in Palmdale.

GEC agreed to buy Austin-based Tracor Inc. for $1.4 billion in cash and assumed debt, making it the sixth-largest U.S. defense-electronics maker as it seeks further acquisitions.

GEC said it will merge Tracor into the U.S. operations of its defense unit, GEC-Marconi, giving it sales of $2.3 billion.

``GEC very clearly stated they want to keep (Tracor's aerospace) segment intact,'' Tracor spokeswoman Marian Kelley said from Austin. ``It certainly would appear they would continue on as they have been.''

Tracor's earnings have grown by 18 percent to 20 percent a year for the past several years, before taking into account acquisition costs.

``They've been a hot performer,'' said Peter Aseritis, a defense industry analyst at Credit Suisse First Boston in New York.

Its mix of defense electronics and computer systems will be a valuable addition to GEC's products, he said.

In Palmdale, Tracor Flight Systems has 52 workers - and expects to increase the number to 150 over the next three years - assembling wings and lower fuselage sections for Boeing's 717 airliner, a twin-engine, 100-passenger aircraft produced in Long Beach.

At Mojave, 250 Tracor workers convert Vietnam-era F-4 fighter jets into QF-4 remote-controlled drones for use as targets for the U.S. Air Force.

Elsewhere, Tracor operates aerospace plants that produce military electronics in Texas and Pennsylvania and missile-decoying flares and chaff in Arkansas and North Carolina.

This is GEC's first major acquisition since Britain's Lord Simpson became managing director in 1996 and said he would focus on defense and industrial electronics and telecommunications equipment.

The company has worked for the Pentagon for years under such names as GEC-Marconi Hazeltine, Cincinnati Electronics, Lear Astronics Corp. and GEC-Marconi Aerospace Inc.

If completed, the acquisition would give Marconi a platform for more expansion in the United States, ``both at this level and perhaps at a larger level,'' Simpson said in a conference call.

``The acquisition of Tracor will bring GEC into rapidly growing defense-related information-technology markets and is in line with GEC's strategy of building a substantial business in the U.S.,'' the managing director earlier said.

The sale is expected to be completed in June, officials said.

Simpson said he's a keen observer of Lockheed Martin Corp.'s proposed $12 billion acquisition of Northrop Grumman Corp., which has run into obstacles from U.S. authorities.

Simpson said he has ``reasonable confidence'' GEC will be able to address regulatory hurdles, ``which obviously exist.'' He said he does not believe GEC will need to sell any businesses.

He called himself optimistic the takeover won't encounter problems under a U.S. law that assesses threats to national security from foreign investment.

Tracor's chief executive, James B. Skaggs, and finance director, Robert K. Floyd, will leave the company, GEC said.

In 1997, Tracor had sales of $1.27 billion and an operating profit of $102 million. Its order book stood at $43.2 billion.