Raytheon Exits the Aircraft Business for $3.3B
Raytheon recently announced that Raytheon Company announced today that it has signed a definitive agreement to sell its wholly owned subsidiary Raytheon Aircraft Company (RAC) to GS Capital Partners, an affiliate of Goldman Sachs, and Onex Partners. RAC makes light civilian aircraft and business jets, including some specialized versions with military utility; nevertheless, the Raytheon release noted that RAC was seen as outside the firm’s desired core focus on the government and defense sector.
The firm has more than 8,500 employees and has approximately 100 authorized service centers worldwide, and will be sold for approximately $3.3 billion; expected net after-tax proceeds to Raytheon would be approximately $2.5 billion. The sale, which is subject to customary conditions and regulatory approvals, is expected to close in the first half of 2007.
Raytheon’s plans for those funds are surprisingly modest…
These new funds will principally be used to buy back stock and retire existing debt. Subject to the closing of the RAC sale, Raytheon’s Board of Directors has authorized the repurchase of up to an additional $750 million of the Company’s outstanding common stock, commencing in 2007. The Board has also authorized the early retirement of approximately $1.0 billion of the Company’s outstanding debentures. The firm has updated its 2007 financial outlook accordingly.
The spin-off company will be Hawker Beechcraft Corporation, and the transaction includes Raytheon Aircraft facilities and other assets in Wichita and Salina, KS; Little Rock, AK; Dallas, TX; and its Fixed Based Operations (FBO) network across the United States, United Kingdom and Mexico. It does not include Raytheon’s ownership in either Flight Options LLC or Raytheon Airline Aviation Services LLC, both of which are reported in the “Other” segment of the Company’s financial statements.
March 26/07: Raytheon announces that the sale is complete.