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UAE Said to Sign Lockheed Thaad Pact Valued to $3.49 Billion

The PAC-3 Missile is a small, highly agile, kinetic kill interceptor for defense against tactical ballistic missiles, cruise missiles and air-breathing threats. Photograph: Lockheed Martin
The PAC-3 Missile is a small, highly agile, kinetic kill interceptor for defense against tactical ballistic missiles, cruise missiles and air-breathing threats. Photograph: Lockheed Martin

Dec. 29 (Bloomberg) -- The U.S. and the United Arab Emirates have signed a deal valued at as much as $3.49 billion for the first international sale of Lockheed Martin Corp.’s newest missile interceptor, according to government officials.

The initial installment of a so-called “undefinitized contract action” is valued at about $1.96 billion, according to a U.S. government official. The Pentagon may announce the contract action as soon as next week, said the official, who wasn’t authorized to discuss the signing prior to its announcement.

The interceptors are a centerpiece of the regional defense that the Obama administration plans to deploy in the Middle East against Iran’s medium- and long-range ballistic missiles. Batteries of land-based interceptors would be linked with the U.S. Navy’s detection systems on Aegis-class destroyers and cruisers.

Terminal High-Altitude Area Defense, or Thaad, missile interceptors are produced in Troy, Alabama, and the fire control equipment and launchers are made in Camden, Arkansas. Lockheed Martin is based in Bethesda, Maryland.

Raytheon Co., of Waltham, Massachusetts, provides the radar, and Honeywell Inc., of Morris Township, New Jersey, makes the missile’s mission computer. Aerojet, part of GenCorp Inc., based in Rancho Cordova, California, makes the Thaad rocket motor. The U.S. subsidiary of the U.K.’s BAE Systems Plc produces the missile seeker.

Lockheed Comment

Lockheed Martin spokeswoman Jennifer Whitlow said the company was continuing to work with the Pentagon’s Missile Defense Agency on the contract. She declined to discuss the timing of any announcement.

Shares of Lockheed closed at $81.52, up 58 cents or .72 percent on the New York Stock Exchange.

The UAE would be the first Thaad international buyer. In September 2008, when it was first proposed for congressional approval, the Pentagon said the deal would be valued at as much as $6.95 billion if all options were exercised.

In August 2010 the UAE scaled back the sale by about one-third. It “adjusted its requirement” to 96 interceptors from 144.

The UAE also reduced its purchase -- from four to two -- of Raytheon’s AN/TPY-2 mobile search and tracking radar. The new radar plan supports two missile batteries, rather than three, according to a Missile Defense Agency document.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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