Continuing the consolidation of the defense industry, Raytheon Co. started a bidding war this week with Northrop Grumman for the defense division of Hughes Electronics Corp. with an initial proposal of $9 billion. Northrop Grumman's initial bid is rumored to be a bit higher.
The bids are expected to rise soon as Hughes' parent company, General Motors Corp., considers the offers for the firm's missiles and defense electronics business lines.
Earlier this week, Raytheon announced it had purchased Texas Instruments' defense division for $2.95 billion, beating out Northrop Grumman's bid. That deal will undergo antitrust review and is expected to be finalized in the second quarter of 1997.
The acquisition of TI's Defense Systems and Electronics Group, which will now be called Raytheon TI Systems, will bring Raytheon's annual revenues to about $15 billion.
In Government Executive's annual ranking of the Top 200 Government Contractors, General Motors, Raytheon and Northrop Grumman rank fourth, fifth and six, respectively. Each garners more than $3 billion in federal contracts each year.
Whichever company acquires Hughes Electronics from General Motors is likely to become the third-largest federal contractor, after Lockheed Martin and the newly combined McDonnell Douglas and Boeing.
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