Newspaper article St Louis Post-Dispatch (MO)

Raytheon's Bid Wins Gm's Hughes Unit $9.5 Billion Beats out Offer from Northrop

Newspaper article St Louis Post-Dispatch (MO)

Raytheon's Bid Wins Gm's Hughes Unit $9.5 Billion Beats out Offer from Northrop

Article excerpt

General Motors Corp. ended its 12-year-old fling with weapons contracting Thursday by selling Hughes Electronics Corp. to Raytheon Co.

Raytheon, a Massachusetts maker of missiles and defense electronics, beat out B-2 bomber and electronics specialist Northrop Corp. by bidding $9.5 billion for the defense holdings, the remaining Hughes Aircraft Co.

The new Raytheon will have $21 billion in sales, $13 billion of it from defense electronics. Much of its business will be supplying components to the two colossi created by a blizzard of defense mergers: Lockheed Martin Corp. and Boeing Co., which announced last month it would buy McDonnell Douglas Corp. for $13.3 billion. "The combined defense business provides us with the critical mass to compete effectively in all of our global markets," said Raytheon Chairman Dennis J. Picard. Like the other big automakers, GM has been refocusing on its core businesses. It had bought Hughes Aircraft for $5.2 billion in 1985, with talk of using Cold War technology to produce cars with radar-driven controls and fighter-jet instrument displays. But Hughes' big success in defense conversion has been in the booming commercial satellite field, including cellular communications and the DirecTV broadcast service. It is those telecommunications businesses that will go forward as Hughes Electronics, with a growth rate of 20 percent a year, said Hughes Chairman C. Michael Armstrong, who is staying on at the company. What had been a third part of Hughes Electronics, the Delco automotive electronics business, will be merged with General Motors' big parts subsidiary, Delphi Automotive Systems. GM Chief Executive John F. Smith Jr. said that business may eventually sell stock to investors. "What we're doing today is to redefine those (three Hughes) businesses," Armstrong said. …

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