SIMI'S WHITTAKER CO. MAY SELL DEFENSE UNIT.

Byline: Michael Stroud Bloomberg Business News

Whittaker Corp. is considering selling its defense electronics unit and spinning off its communications business, Chief Executive Thomas Brancati said Friday.

Brancati said the Simi Valley-based aerospace and communications company is holding discussions with a "major" defense company about selling its defense arm, which makes missile defense systems and other military electronics products.

"If they decided they wanted to acquire our defense unit and made an offer that made sense to shareholders, I see no reason why it could not be this year," he said after the company's annual shareholders meeting at the Ronald Reagan Presidential Library.

Brancati stressed that the company is not "actively seeking to sell" the defense electronics unit, which has annual revenue of $45 million to $50 million, but has been approached by companies interested in buying it.

Whittaker has not been approached about selling the entire company, but "if it makes sense, we have no problem going in that direction," he said.

Analyst Paul Nisbet of JSA Research Inc. estimated that the defense unit could command as much as $75 million.

A sale of the defense business "sounds logical," he said. "They would get cash to reinvest in their (remaining) aerospace business or buy other promising aerospace businesses."

A sale of the entire company is less likely, Nisbet added.

"Smaller companies haven't generally been participants in the consolidation of the (defense) business," he said.

Whittaker also makes commercial aerospace products, such as control valves and safety systems.

Its communications business - fortified by two acquisitions over the past year - totals about $150 million in annual revenue. Once sales reach $200 million, "it may very well be that we choose to spin that company off," Brancati said. "It could create a great deal of value for our shareholders."

The earliest a spinoff could happen is 1997, Brancati said.

Brancati noted that the company spun off its biotechnology business in 1992.

He also said the company might hold on to the communications business or sell all or part of it.

Management owns 20 percent of the company's stock, Brancati said.

Whittaker, seeking to insulate itself from reduced federal defense spending, is building its communications business.

On March 4, the company acquired Xyplex, a networking company, from Raytheon Co. for $117.5 million.

That followed the April 1995 purchase of Hughes LAN Systems from General Motors Hughes Electronics.

Brancati said the company has no immediate plans for other acquisitions, although it would consider buying communications and aerospace companies for $10 million to $15 million.