GM Completes Spinoff, Sale of Hughes Unit

DETROIT — General Motors Corp., ending a dozen-year run as one of the nation’s biggest defense contractors, said Thursday that it completed the $9.8-billion spinoff and sale of its Hughes Electronics defense unit to Raytheon Co.

The long-awaited deal and restructuring of Los Angeles-based Hughes also included the transfer of Delco Electronics, its automotive systems unit, back to GM’s main car- and truck-parts unit, Delphi Automotive Systems.

Recapitalized GM Class H shares tied to a smaller Hughes Electronics--now essentially a telecommunications and satellite broadcasting company--began trading on the New York Stock Exchange on Thursday, rising $6.81 to close at $37.94. The old Class H shares closed Wednesday at $66.94.

Under the deal, GM’s Class H shareholders received about 17% of the equity in post-merger Raytheon, while GM’s own shareholders received about 13%, both through a newly issued Raytheon Class A stock.

Raytheon’s shareholders retained 70% of the company and were issued new Raytheon Class B shares.

In their first day of trading on the NYSE, the new Raytheon Class A shares closed at $54.75, and the Raytheon Class B shares closed off 25 cents, at $56.

GM’s shares lost 81 cents to close at $63.56, also on the NYSE.

The deal strengthens Lexington, Mass.-based Raytheon’s dominance of the missiles and defense electronics business, solidifying its position as the third-largest U.S. defense contractor behind Boeing Co. and Lockheed Martin Corp.

Hughes, acquired by GM for $5 billion in 1985 during the Reagan-era defense boom, makes the Tomahawk cruise missile, various air-to-air missiles and radar systems, among other products.