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`In addition, GM wants to reap part of the multibillion-dollar profit it has shown on paper since it bought all of Hughes in 1985 for $5.2 billion.
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`Still, GM's decision to sell Hughes Aircraft now is somewhat ironic, said Jon Kutler, who runs Quarterdeck Investment Partners and once helped craft GM's
`purchase of Hughes as an investment banker.
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`GM bought Hughes at a time when defense was expected to remain a hot growth business, and "how appropriate that Raytheon-Hughes is now seen as the last
`mega-deal at this end of the spectrum" of the defense industry's consolidation, Kutler said.
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`The Hughes sale does not include the company's two other groups: the space and telecommunications unit and the Delco automotive-electronics arm.
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`GM said it will absorb Delco into its own operations. Armstrong said he will continue to run Hughes’ space business because of its strong growth prospects.
`Hughes is the world's leading producer of commercial satellites at a time when demand for satellites is booming. Hughes operates DirectTV, a satellite
`television system that now has more than 2 million subscribers, and also provides satellite transmissions for network television, among other services.
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`"I'm pretty excited about the growth prospects on that side of the business," Armstrong said. "We really anticipate a company that should be able to grow 20%
`a year."
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`Ultimately, GM may also sell Hughes telecommunications group.
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`Raytheon, which will have 127,000 employees worldwide after the Hughes deal, also has several commercial operations. It builds Beech general aviation
`aircraft, Amana refrigerators and Speed Queen washer—dryers, and it provides engineering and construction services.
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`GM is using a complex transaction to sell the Hughes assets to Raytheon in a way that is tax-free to all the shareholders. In the end, GM shareholders will own
`roughly 30% of the new Raytheon. The other 70% of the company would be owned by current Raytheon shareholders. The deal involves a number of steps that
`include debt and stock issues, which will total $9.5 billion.
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`After the merger announcement, GM's Class H stock closed unchanged at 5362625 on the New York Stock Exchange. GM's common stock rose 50 cents, to
`$6o.625, and Raytheon's stock jumped $1.50, to $48.50. Northrop Grumman's stock gained 37.5 cents, to $78.
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`Times staff writer Peter Noah contributed to this story.
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`* DEFENSE RIVALS: What's next for Raytheon, Northrop Grumman. D1
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`* DEAL'S FALLOUT: Impact on Hughes workers, South Bay real estate. D2
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`Cup}-light 2016 Los Angeles Times
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`Raytheon2007-0002
`http://articles.latimes.com/print/1997-01-17/neWs/mn-19463_1_hughes-airc... 6/14/2016
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`Raytheon2007-0002