Ever since January, word has been floating around about a sizable defense contract that Lockheed Martin (NYSE:LMT) had apparently secured to sell missiles to a mysterious Mideast government buyer. A little more than a month ago, the Pentagon confirmed the size of the sale ($308 million) and the customer (Kuwait). This morning, Lockheed Martin itself revealed the rest of the details.
Lockheed Martin confirmed that it has received a $308 million "modification" to a contract signed with the U.S. Army Aviation and Missile Command for the sale of missiles to Kuwait. Lockheed Martin will be selling 244 "hit-to-kill" Patriot Advanced Capability (PAC-3) Patriot air defense missiles, plus 72 launcher modification kits, related equipment, and program management services. This will be Lockheed's first sale of the PAC-3 Patriot variant to Kuwait, which becomes Lockheed's sixth international customer for the missile.
Other foreign buyers of the PAC-3 include Germany, Japan, the Netherlands, Taiwan, and the United Arab Emirates.
The mix of equipment complicates assigning the missiles an exact per-unit price. However, spreading the contract amount over just the 244 missiles themselves results in an implied per-unit price of $1.26 million per Patriot -- a price significantly below the $2 million to $3 million apiece that Patriots are commonly believed to cost.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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