Raytheon to Sell Its Amana Unit, Related Consumer Accounts

Raytheon Co. said on Monday that it agreed to sell its Amana appliances unit and related consumer accounts for a combined $750 million to concentrate on its expanded defense business.

Amana’s home appliance, heat ing, air conditioning and commercial cooking segments will be sold to closely held Goodman Holding Co. of Houston for $550 million, Raytheon said. The division’s credit accounts will go to an undisclosed buyer for $200 million.

Lexington, Mass.-based Raytheon is selling peripheral businesses to help pay a debt that may rise to about $11 billion from its purchase of the defense businesses of Texas Instruments Inc. and General Motors Corp.’s Hughes Electronics, analysts said. Raytheon may also sell its engineering services unit, which has about $3 billion in revenue, as it transforms itself into a maker of small aircraft and consumer and military electronics, some analysts said.

Proceeds from the sales “certainly leave Raytheon with enough money to pay for the debt for Hughes and Texas Instruments,” said Lehman Bros. analyst Andrea Shen.

Raytheon shares closed up 69 cents at $54.88 on the New York Stock Exchange.

The Amana sale would ease Raytheon out of the home appliance business, which it has been in for more than 50 years. It has been one of the five largest appliance makers, competing against the likes of Whirlpool Corp. and General Electric Co.

Raytheon “has done fairly well” with the price on the transactions, said analyst Keith Patriquin of Loomis, Sayles & Co., which owned 3.7 million Raytheon shares as of the end of March.

Raytheon said it expects the transactions, which require gov- ernment approval, to be completed during the third quarter.

Raytheon is keeping the appliance division’s commercial-laundry business and the electronic-controls segment for now as it continues a “strategic assessment.” Those businesses generated 20% of the appliance division’s revenue last year and 50% of its profit.

“Raytheon could sell the [commercial-laundry and electronic-controls businesses] at a price that would give them a top dollar,” said Paul Nisbet of JSA Research.

Patriquin said the remaining units could raise an additional $500 million to $700 million. It’s “a realistic number,” he said.

Analysts and investors had estimated that the entire appliance division would sell for about $1 billion.

Goodman is purchasing a group of appliance products that generated $1.2 billion in revenue last year. Goodman plans to add the products to its air conditioning manufacturing business, which includes central air conditioning units--carrying the Goodman, GMC and Janitrol brand names--and room air conditioners.

“We think it’s a perfect fit,” Goodman Chairman and Chief Executive Frank Murray said. “We view the value of the Amana name and the quality of their management as a real plus.”

Murray would not provide financial information about Goodman.

According to Forbes magazine’s ranking of America’s largest private companies, Goodman had $500 million in revenue last year and 1,700 employees.

Murray said he does not yet know if any of the 5,500 Raytheon workers affected by the transaction could lose their jobs.