Putting even further pressure on the European defense minnows – and in the context of the US defense majors, even the biggest European is by comparison a minnow, Raytheon Co, Lexington, Massachusetts emerged as the winning bidder for Texas Instruments Inc’s defense business with its offer of $2.95bn in cash. It is said that Raytheon beat Northrop Grumman Corp in the bidding The acquisition will increase Raytheon’s annualized defense electronics sales to $8bn and its current defense electronics backlog to $9.3bn, and is seen as positioning the company to launch a $9bn bid for the defense business of Hughes Electronics Corp, the General Motors Corp that is preparing to auction its defense electronics business any day now. Raytheon says its debt will total $6.6bn following the acquisition, and its debt-to- capital ratio will be about 59%, but We have a plan in place to bring that debt down. We know we can do it, the company told Reuter. Despite the debt, Raytheon will retain significant flexibility to operate our business and to take other actions we might deem necessary because we can operate from a position of strength, the company added. Texas Instruments’ defense unit, which employs about 12,000 people, is based in Lewisville, Texas, and forecasts 1996 sales of about $1.8bn. It supplies advanced defense systems, including precision-guided weapons, strike missiles, airborne radar, night vision and electronic warfare systems. Texas says it now wants to focus on digital solutions for the networked society, and that the sale will give it the resources to push for rapid growth in the high-margin market of signal processing systems, but will not say whether any of the money will go on acquisitions. Raytheon bought E-Systems Inc for more than $2bn in 1995, and last year bought Chrysler Corp’s defense electronics business for some $475m.
