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General Dynamics and Alvis PLC Agree to Terms of Acquisition Offer

FALLS CHURCH, Va. – General Dynamics (NYSE: GD) and Alvis PLC (LSE: ALV), London, U.K., have agreed on the terms of a recommended cash offer to be made by Morgan Stanley & Co. Limited on behalf of General Dynamics for all of Alvis’ outstanding shares. The offer is valued at £309 million based on a per-share price of £2.80, or approximately $556 million at the rate of $1.80 to £1.00.

“Alvis complements and strategically expands General Dynamics’ European armored vehicle business. The company is the leading armored vehicle manufacturer in the U.K. and Scandinavia, and one of the leading European and international companies. With this acquisition, we intend to build upon Alvis' strengths by capitalizing on our ability to develop technology, our existing commercial relationships and fiscal operational management practices. We believe that this offer represents an excellent opportunity for Alvis shareholders to realize their investment for cash at an attractive level,” said Nicholas D. Chabraja, chairman and chief executive officer of General Dynamics.

The proposed acquisition has been approved by the board of directors of each company; regulatory approval is required. The companies expect the transaction to be completed in the second half of 2004.

Alvis, which has approximately 2,800 employees, will become part of General Dynamics’ Combat Systems group. It offers the full spectrum of armored vehicle capability including main battle tanks, armored infantry vehicles, armored personnel carriers and light armored vehicles. It has a global reach, with major manufacturing facilities in Scandinavia and South Africa as well as the U.K., and having exported military vehicles to more than 60 countries. There are no plans to relocate any production activity from present locations as a result of the acquisition.

General Dynamics, headquartered in Falls Church, Virginia, employs approximately 67,600 people worldwide and had 2003 revenues of $16.6 billion. The company has leading market positions in mission-critical information systems and technologies, land and amphibious combat systems, shipbuilding and marine systems, and business aviation.

Any forward-looking statements in this press release are based on management’s expectations, estimates, projections and assumptions. Words such as "expects," "anticipates," "plans," "believes," "anticipates," "scheduled," "estimates," variations of these words and similar expressions are intended to identify forward-looking statements which include but are not limited to projections of revenues, earnings, segment performance, cash flows and contract awards. Forward Looking Statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including, without limitation: the company’s successful execution of internal performance plans; performance issues with key suppliers and subcontractors; the status or outcome of legal and/or regulatory proceedings; the status or outcome of labor negotiations; changing priorities or reductions in the U.S. government defense budget; termination of government contracts due to unilateral government action; and the timing and occurrence (or non-occurrence) of circumstances beyond the company’s control.

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General Dynamics Corporation (ticker: GD, exchange: NYSE)
News Release - Thursday, March 11, 2004
Press Contact: (703) 876-3199



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