Content area
Full Text
Raytheon {RTN.A/RTN.B} on Wednesday completed its $9.5 billion merger with Hughes' {GMH} Aircraft Co. in a complex equity transaction that will transform Raytheon into a more than $20 billion company that is the nation's No. 3 defense contractor, the companies said yesterday.
"Our strategy has been to remain a top-tier company in a consolidating industry," Dennis Picard, Raytheon's chairman and CEO, said in a statement. "The historic merger with Hughes defense and our earlier acquisitions have enabled us to achieve that strategy. Today, we can proudly say that we are a global technology leader and a defense electronics businesses, with leadership positions in general aviation aircraft, commercial electronics and engineering and construction."
The deal was overwhelmingly approved recently by shareholders from Raytheon, Hughes and Hughes' former parent General Motors {GM}, realizing a merger plan disclosed early this year. Raytheon won the right to merge with Hughes Aircraft Co. after fierce bidding as part of a strategic plan to become one of three major U.S. defense contractors (Defense Daily, Jan. 17). GM, the world's largest car maker, divested itself of Hughes' defense operations to better focus on its automotive business.
The new Raytheon--now being traded on the New York Stock Exchange under both the RTN.A and the RTN.B ticker symbols--will have broad electronics, systems and missile capabilities. It will be positioned in the defense industry rankings behind Lockheed Martin {LMT}--which currently is seeking government approval to merge with Northrop Grumman {NOC} in an $11.6 billion deal--and Boeing {BA}. Boeing--because of its merger with McDonnell Douglas--is a $48 billion company that is the world's leading aerospace concern, but Lockheed Martin with the inclusion of Northrop Grumman will be a $36 billion company with greater defense sales.
The Hughes deal is the latest in a series of Raytheon moves to grow its defense operations. In the past two years, Raytheon has acquired E-Systems for $2.3 billion, Chrysler's {C} defense assets for $455 million, and earlier this year closed the $3 billion cash purchase of Texas Instruments' {TXN} defense operations.
Defense units acquired by Raytheon--including from Hughes, E- Systems, Chrysler and TI--would be combined with Raytheon's existing Raytheon Electronic Systems and united under a new unit, Raytheon Systems Co. Raytheon Systems will account for $14.5 billion of Raytheon's total...