Boeing Expects EC to OK Hughes Deal

Boeing Co. on Friday shrugged off an expanded European regulatory probe into its planned $3.75-billion purchase of Hughes Electronics Corp.’s satellite units, saying it expected the deal to be approved.

“We expected a thorough review all along and the process is proceeding normally,” said Anne Eisele, a spokeswoman for Boeing Space & Communications Group in Seal Beach.

“Our belief that the transaction will be approved remains unchanged. It [the probe] will delay it obviously, but we don’t think it’s going to affect it in the long run.”

The European Commission said Friday that it would deepen its investigation of the transaction, announced in January, that would give the world’s biggest aerospace company control of Hughes Space & Communications Co., Spectrolab Inc. and Hughes Electron Dynamics.

The commission said an initial investigation had shown the purchases could boost Hughes’ leading position in geostationary Earth-orbit communications satellites by giving it access to sensitive information from Boeing about rival products and taking advantage of closer ties to Boeing’s launch business.

Boeing shares closed down 13 cents at $38.25 on the New York Stock Exchange. Hughes Electronics fell $1.56 to close at $94.88, while parent company, auto giant General Motors Corp., closed off $1.94 at $70.44, also on the NYSE.

Although Boeing had originally hoped to close the purchase by June, the Seattle-based company pushed the target back to August a few weeks ago, when it became clear regulators were going to take a closer look.

Analysts said regulators were unlikely to block the deal, but could propose restrictions on how closely the satellite and launch units are allowed to work together.

“I think it will ultimately get through with perhaps some constraints on how they might operate,” said Paul Nesbit, an analyst with JSA Research. “They might require that there be a Chinese wall, so to speak, between the launch people and the satellite people.”

Robert Friedman, an analyst with S&P; Equity Group, said the delay should worry cash-strapped Hughes Electronics more than Boeing.

“This deal is not a slam dunk by any means,” Friedman said. “Hughes Electronics should be concerned, because if the deal doesn’t go through, their lower-margin satellite division would have to go back into the company.”