Terrence K. O'Brien
WASHINGTON -- US Justice Department officials have approved Raytheon Co.'s $9.5 billion acquisition of Hughes Electronics Corp. The acquisition makes the Lexington, Mass., company the nation's third-largest defense contractor.
The deal went through after Raytheon agreed to sell off some electronic vision technology that guides missiles to their targets, because of Justice Department fears that the Hughes acquisition might have given the company a near monopoly on the technology, agency officials confirmed. Raytheon also agreed to set up a temporary "fire wall" between Raytheon's missile businesses to ensure continued competition in bidding on contracts.
Last January, Raytheon announced plans to buy Hughes from General Motors Corp. for a mix of stock and debt.
The operations that would be sold off are focal plane arrays for sophisticated weapons systems. Those and other electronic sensors purchased by Raytheon earlier this year from Texas Instruments would partly duplicate those
acquired from Hughes.
The Justice Department found that Raytheon would have nearly 80 percent of the market for focal plane arrays. Hughes' electro-optics operations, the industry's largest, include ground-based radar systems, forward-looking infrared radar used in airplane cockpits and night-vision, and laser rangefinders.
Company officials said they hope to get final approval from directors and shareholders later this year.
With the addition of the Hughes operations, Raytheon's estimated $21 billion in annual revenue will put it behind only No. 1 Boeing and Lockheed Martin Corp. among aerospace and defense companies. But the acquisition is expected to make Raytheon a big player in the lucrative defense electronics market. That business would account for about $13 billion, or about 60 percent, of the company's revenue, up from about 40 percent just two years ago.