Questions Background Info My company is Raytheon Corporation (RTN), and I am thinking of the possibility of it merging with another company: My first choice is: British Aerospace Electronic...

RUNNING HEAD: MERGER AND ACQUISITIONS 1
Merger and Acquisition
RUNNING HEAD: MERGER AND ACQUISITIONS 2
Merger and Acquisition
Introduction
Mergers and acquisitions can be defined as a corporate strategy that is followed by the
management of the company while dealing with the growth by way of selling, buying,
combining or dividing either similar types of companies or different types for the purpose of
working together as a single enterprise. The term mergers and acquisitions are sometimes
interchanged, but there is a difference between the two. (Stahl, 2005) Acquisition refers to the
purchasing of one company by another company that is either financially or strategically strong.
Acquisition can be either hostile or friendly in nature that depends on the forceful agreement or
the mutual agreement between the companies.
The mergers and acquisition are carried out in order to reap the benefits, such as:
improvement in the utilization of capacity; enhancement in the sales force coverage; reducing the
managerial staff and thus the overall cost of operation. The company is able to attain the
economies of scale, new and advanced technologies, and reduction in the tax obligations on the
whole.
Merger and Acquisition of company
A successful merger is the one which provides benefits to both the companies that are
involved in the merger. It can be ascertained by the ability of the companies or the merger team
to establish as quickly as possible the productive relationship and thus attain profitability. There
are many success stories of the companies acquiring another and winning over to success.
Company Overview: Raytheon
Raytheon is one of the largest defense contractors in the world that focuses on defense,
homeland security and other government markets globally. Broad product portfolio and well
RUNNING HEAD: MERGER AND ACQUISITIONS 3
balanced revenue stream shields Raytheon against demand fluctuations in certain product
categories and also enables it to benefit from opportunities available in various segments.
However, highly competitive environment may negatively impact Raytheon’s operations and its
financial condition. Raytheon has a broad product portfolio. The company operates through six
business segments, missile systems, space and airborne systems, integrated defense systems,
network centric systems, technical services and intelligence and information systems. The
missile systems division offers missile systems for the armed forces of the US and other allied
nations. The company’s space and airborne systems division offers integrated systems and
solutions for advanced missions, including traditional and non-traditional intelligence,
surveillance and reconnaissance, precision engagement, unmanned aerial operations and space.
Integrated defense systems leverages its core domain knowledge and capabilities in sensors;
command, control and communication; effects and mission support; and air and missile defense
and civil security response solutions.
Raytheon's network centric systems provide net-centric mission solutions for government
and civil customers. The company’s technical services division provides training, logistics,
engineering services, product support, and operational support services. Similarly, Raytheon‘s
intelligence and information systems provides intelligence and information solutions specializing
in ground processing, unmanned ground systems, cyber security solutions, and homeland/civil
security.
In addition, the company also has a well balanced revenue stream. Raytheon generated
21% of total revenues from missile systems, which is the largest business segment of the
company in FY2011. Further, the company generated 19.7% from space and airborne systems,
followed by integrated defense systems (18.6%), network centric systems (16.9%), technical
RUNNING HEAD: MERGER AND ACQUISITIONS 4
services (12.6%), and intelligence and information systems (11.3%) in FY2011.Thus, broad
product portfolio and well balanced revenue stream shields Raytheon against demand
fluctuations in certain product categories and also enables it to benefit from opportunities
available in various segments.
Recent Acquisitions of the company:
Raytheon is continuously focused on expanding its capabilities through strategic
acquisitions. The company made few significant acquisitions in 2011. For instance, in December
2011, Raytheon acquired Henggeler Computer Consultants, a US-based privately held developer
of enterprise architecture, analytics, software, and cloud-based solutions to intelligence
community systems.
Subsequently, in the same month, Raytheon acquired Pikewerks Corporation, a US-based
provider of Electronic Armor and Second Look products, which serve as an anti-exploitation
software tool that protects executable files. These acquisitions would further expand Raytheon's
capabilities to serve the cybersecurity, enterprise architecture and systems engineering needs of
customers in the intelligence community as well as in the Department of Defense. Moreover, in
June 2011, the company acquired key business assets of Ktech Corporation, a provider of pulsed
power systems.
This acquisition expands Raytheon’s capabilities and opportunities in the non-kinetic
effects markets. Thus, significant business acquisitions such as aforementioned would strengthen
and expand Raytheon’s business in the growing cybersecurity and intelligence community
markets, and further widen the scope of its product development and sales abilities.
Options for merger
The three major options which the company can merge with are:
RUNNING HEAD: MERGER AND ACQUISITIONS 5
 British Aerospace Electronic Systems (BAE)
 European Aeronautic Defense and Space Company (EADS)
 CyberTech Inc. a private company ticker (ENECENP)
Raythone is currently operating in the US and is trying to expand the reach to the global
market, one of its biggest competitor is European Aeronaut...