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General Dynamics

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agreed to pay $1.1 billion for

General Motors'

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defense unit, an operation with which it already produces an armored vehicle for the Army.

The companies' joint venture produces Stryker combat vehicles for the U.S. military, a program for which the Pentagon recently appropriated another $1.5 billion. The acquired unit has annual revenue of about $1 billion a year. The deal is expected to close in the first quarter of 2003.

General Motors has recently been trying to sell off noncore assets to raise money for its pension plan, which is underfunded to the tune of $20 billion.