GM Wins Bidding Battle for Hughes Aircraft Co. / Price in Excess of $5 Billion
GM will pay the Howard Hughes Medical Institute, which owned Hughes Aircraft, $2.7 billion in cash for all of the capital stock of Hughes Aircraft and issue 50 million shares of a new GM class H common stock.
Hughes, which had 1984 sales of $4.9 billion and earnings of $266 million, will be maintained as an independent company and will be ccmbined with GM's Delco automotive electronics business and a portion of its defense operations.
GM stock was up 87.5 cents to $72.375 a share shortly after 1 p.m. after a delayed opening on the New York Stock Exchange Wednesday. Hughes Aircraft is a privately owned company.
Even with the purchase of the defense contractor, GM will be ranked the second largest U.S. industrial corporation behind Exxon Corp. in terms of revenues.
GM Chairman Roger B. Smith said at a news conference the merger between the two firms marks a ""truly super historic day.
""We had been looking at Hughes long before it officially came up for sale,'' he said. ""I've long maintained that the future of the automotive industry is in electronics.''
Robert F. Greenhill, managing director of Morgan Stanley, which represented Hughes Medical in the sale, said details of the bidding would remain confidental. He repeatedly declined to answer questions about other bidders for Hughes that included Ford Motor Co. and Boeing.
Greenhill said details of the sale would be mailed to GM stockholders in within 30 days.
The acquisition is the largest outside of the oil industry and eclipsed the recent $5 billion marriage between Allied Corp. and Signal Cos., which decided to merge after considering a joint bid forHughes Aircraft.
The money will go to the Howard Hughes Medical Institute, which controls the nation's seventh largest defense contractor founded by the late eccentric billionaire. The institute, as tight-lipped asthe lengendary aviator himself, will use the funds for medical research.
Dr. Donald S. Fredrickson, a trustee and chief executive of the institute, said the organization is ""grateful that Hughes Aircraft is becoming part of one of America's greatest corporations. …