Graham Warwick/ATLANTA

RAYTHEON HAS AGREED to buy Chrysler's defence and aerospace businesses for $475 million. Aircraft-modification specialist Chrysler Technologies Airborne Systems (CTAS) and defence-electronics company Electrospace Systems (ESI) will become part of E-Systems, acquired by Raytheon for $2.3 billion in May 1995.

Raytheon says that Waco, Texas-based CTAS, which modifies military, commercial and VIP aircraft, will complement E-Systems' Greenville division. The communications, intelligence and electronic-warfare business of Richardson, Texas-based ESI will complement E-Systems' ECI division, the company says.

The Chrysler division employs 2,800 people and had 1995 sales of almost $500 million. The US car maker, acquired Electrospace in 1987, creating CTAS from a division of ESI in 1989. Chrysler will retain Pentastar Electronics. The sale is expected to be completed by June.

The acquisition is consistent with Raytheon's strategy " remain a top-tier defence contractor as well as a strong, diversified commercial company", says chairman Dennis Picard. The deal will help boost defence sales to 40% of Raytheon's total revenues in 1996, up from 35% in 1994.

The company says that it has the "strength and the desire" to build its commercial businesses, including Raytheon Aircraft, by means of acquisitions.

CTAS has several major military-aircraft upgrade contracts, including the US Air Force's Lockheed Martin C-130/C-141 auto-pilot-replacement programme.

Source: Flight International