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Raytheon to Sell Aircraft Business

Defense contractor Raytheon said Thursday it will sell its aircraft business for $3.3 billion to Hawker Beechcraft, a new company formed by GS Capital Partners.

Raytheon expects to see about $2.5 billion in proceeds after taxes. GS Capital Partners is an affiliate of Goldman Sachs and Onex Partners. Raytheon Aircraft Co., based in Wichita, Kan., has more than 8,500 employees and has about 100 centers worldwide. The company makes Hawker and Premier business jets.

Subject to regulatory approval, the company expects the transaction to close in the first half of 2007. If the deal closes, the company is authorized to buy back an added $750 million in shares in 2007, and retire about $1 billion in debt.

Raytheon will begin reporting the aircraft business as a discontinued operation. As a result, the company lowered its guidance for 2006 and 2007.

The company expects earnings per share of $2.35 to $2.45, down from $2.70 to $2.80, on sales of $20 billion to $20.5 billion, down from $23.1 billion to $23.6 billion.

In 2007, Raytheon now forecasts earnings per share of $2.75 to $2.90, down from $2.95 to $3.05, on sales of $21.3 billion to $21.8 billion, down from $24.6 billion to $25.1 billion.

Analysts surveyed by Thomson Financial were expecting earnings per share of $2.81 on revenue of $23.32 billion for 2006, and $3.12 on revenue of $24.58 billion for 2007.

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