YOU ARE HERE: LAT HomeCollections

U.S. Seeks More Information on Raytheon-Hughes Deal

May 10, 1997|From Bloomberg News

LEXINGTON, Mass. — Raytheon Co. has received a request from the Justice Department for more information on the firm's planned $9.5-billion purchase of General Motors Corp.'s Hughes defense business.

The request, which covers tens of thousands of documents, focuses primarily on whether the new firm would have too much control over the market for air-to-air missiles and high-tech sensors known as electrooptics, a person familiar with the request said.

The size of the document demand means the transaction will probably take months to gain needed approval. The Pentagon official who will make a recommendation on the proposal said the joint review by the Defense and Justice departments is still preliminary.

"We have not yet reached any conclusions," said John Goodman, deputy undersecretary of defense for industrial affairs. "We are certainly not in the final stages yet."

The Raytheon-Hughes combination would create the nation's third-largest aerospace and defense company and the dominant defense electronics maker, analysts said. Together, the companies had revenue last year of $21 billion.

The new company would be the sole supplier of certain missiles, including the Advanced Medium Range Air-to-Air Missile.

A key issue centers on Raytheon's argument that government officials should also consider companies that now produce surface-to-air missiles, when they decide whether Raytheon would have too much market control.

On Friday, Raytheon disputed a Wall Street Journal report suggesting that the Defense Department is considering seeking major changes in the proposed combination, including the possibility that Raytheon would be forced to divest some of its missile operations.

The Journal reported Friday that unnamed senior officials at the Pentagon are concerned that allowing Raytheon and Hughes to join forces would concentrate too much of one type of military business in one firm.

Shares of Raytheon closed at $46.50, down 62.5 cents on the New York Stock Exchange.

Los Angeles Times Articles