Raytheon Co yesterday declined comment on report in the Wall Street Journal that it had offered $9bn for the defense assets of Hughes Electronics Corp. The paper said Northrup Grumman Corp had offered $200m to $500m more than Raytheon for Hughes, but both companies are expected to increase their bids. Analysts told Reuter that Raytheon may have an edge because of its comparative financial strength and vendor General Motors Corp’s desire to avoid a hefty tax bill. In order to avoid paying about $2bn of capital gains taxes that would result from a cash sale of Hughes, it wants to load up the unit with as much as $5bn in debt against just $200m of debt at present. The acquiring company would issue shares to make up the balance of the purchase price, but for Northrop to issue $4bn to $6bn in shares, it would have to issue enough shares to give a majority holding to General Motors where Raytheon would only only to give about a 30% stake in the company.
