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General Dynamics to pay $1.1 bln for GM military unit

FALLS CHURCH, Va., Dec 19 (Reuters) - Defense contractor General Dynamics Corp. said on Thursday it signed a deal to buy General Motors Corp.'s defense unit for $1.1 billion to bolster its production of combat vehicles.

General Dynamics, which makes defense products such as submarines and destroyers, said it expected the deal to close in the first quarter of 2003. GM's defense unit expects to report $950 million in revenue in 2002, and has a backlog -- contracts from its customers -- of more than $1.5 billion.

The deal follows a recent Pentagon decision to include $1.5 billion in the fiscal 2004 budget to pay for a fourth brigade of Stryker combat vehicles, which are being made by a joint venture of General Dynamics and GM's defense unit. General Dynamics has said it is working on ways to boost the Stryker's firepower, which may lead the Pentagon to buy another two brigades.

New combat vehicles such as Stryker are part of the U.S. military's bid to transform itself into a faster, more mobile fighting force to deal with new threats around the the world.