Chrysler Corp. is selling its defense electronics business and the bulk of its aerospace unit to Raytheon Co. for $475 million, the companies said Monday.
Raytheon has been expanding its defense electronics lines and Chrysler has plotted a shift back to its main automaking business.Chrysler's Electrospace Systems Inc. and Chrysler Technologies Airborne Systems Inc. units will become part of Raytheon's E-Systems Inc. in exchange for $455 million in cash and a $20 million dividend, Chrysler said.
"This transaction is consistent with our previously announced strategy of enhancing shareholder value by focusing on our core automotive business," Chrysler Chairman Robert J. Eaton said in the announcement.
Chrysler bought Electrospace Systems in 1987 for $370 million and created the Airborne Systems unit from an Electrospace division in 1989, spokeswoman Rita McKay said.
Pentastar Electronics, another Chrysler Technologies unit, is not part of the deal.
Electrospace, based in Waco, Texas, with 1,100 employees, makes electronic warfare and communications equipment for governments, including systems to encrypt and encode telephone transmissions.
Airborne Systems designs and installs aircraft modifications for public and commercial clients, including the Japanese government.
Raytheon, which has been a competitor in both areas, said the two units have annual sales approaching $500 million. Chrysler would not confirm the figures.
They will become part of E-Systems, a Texas defense-electronics company Raytheon bought last year for $2 billion.