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Raytheon plans to sell aircraft unit

December 22, 2006|From the Associated Press

BOSTON — Raytheon Co. plans to sell its aircraft business for $3.3 billion to Hawker Beechcraft Corp., a new company formed by an affiliate of Goldman Sachs Group Inc. and Onex Partners.

Raytheon, the world's fifth-largest defense contractor, said Thursday that it expected to pocket $2.5 billion after taxes from the sale of the Wichita, Kan.-based unit, which makes Hawker and Beechcraft planes for commercial and military markets. The business has more than 8,500 employees and about 100 centers worldwide.

The deal included facilities and other assets in Little Rock, Ark., Dallas and two sites in Kansas and the company's maintenance, service and support network across the United States, Britain and Mexico, Raytheon Chief Financial Officer David C. Wajsgras said in a conference call.

The aircraft division to be sold makes Beechcraft single-engine, two- and four-seat planes and Hawker mid-size, twin-engine corporate jets. The planes have foreign rivals, including those of Canada-based Bombardier Aerospace and Brazil-based Embraer.

The sale of Raytheon Aircraft is part of the Waltham, Mass., company's strategy to focus on its core government and defense business, Raytheon Chief Executive William H. Swanson said.

"It is a significant deal. It is almost 15% of the company's sales and 10% of its operating earnings this year -- that is not a trivial amount," Caris & Co. analyst Mary Anne Sudol said.

Raytheon's shares slipped 4 cents to $53.82. The purchasing company was formed by GS Capital Partners, an affiliate of Wall Street investment bank Goldman Sachs and Toronto-based private equity firm Onex Partners.

Raytheon will begin reporting the aircraft business as a discontinued operation. As a result, the company lowered its guidance for 2006 and 2007.

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