In the first place, this amounted to the Carlyle Group selling itself to itself while most of the reported "suitors" were Carlyle Group too.

9/12/1995 Kokomo Tribune "$370 million purchase of Fort Wayne firm to boost GM subsidiary's defense portfolio By DAVE PHILLIPS Tribune staff writer

Hughes Aircraft Co., a unit of Los Angeles-based Hughes Electronics Corp., agreed Monday to pay $370 million for Fort Wayne based Magnavox Electronic Systems Co. The Carlyle Group, a Washington- based merchant banking company, placed the defense electronics firm on the sales block in early May. Litton Industries, Loral Corp., Lockheed Martin and Rockwell International were among the reported suitors for the company.

Federal regulators must still approve the purchase. Magnavox Electronic Systems is a producer of military tactical communications, electronic warfare, command and control systems, electro-optics and anti-submarine warfare. Magnavox, with 3,000 employees and 1994 revenues of more than $400 million, has a current backlog of nearly $500 million. C. Michael Armstrong, chairman and chief executive officer of Hughes, said the purchase would strengthen Hughes Aircraft's core businesses.

"In addition to our defense systems, the expertise of Magnavox should contribute to Hughes Electronics' telecommunications offerings, allowing us to expand across a broader set of customers and more readily adapt commercial communications technology to military use," Armstrong said. Analysts expect Hughes to reorganize Magnavox and trim payrolls as the defense electronics industry continues to consolidate, streamline operations and rationalize capacity.

Jack Modzelewski, an analyst with Paine Webber, called the purchase price "fair" and said the acquisition will bring new product and market opportunities to Hughes' portfolio. Hughes Aircraft produces missiles, airborne and ground-based radars, electro-optical systems,, electronic warfare, shipboard displays and information systems.

"The business lines of Magnavox are a natural fit with the business lines of Hughes Aircraft, particularly with those of Hughes Radar and Communications Systems," said Michael T. Smith, Hughes Aircraft chairman.

In addition to Fort Wayne facilities, Magnavox operates research, development and manufacturing operations in Mahwah, N.J., and Torrance, Calif. Carlyle acquired Magnavox in 1993 for $165 million from the Dutch company Philips Electronics NV. The company's Fort Wayne employment level has fallen about 20 percent under Carlyle. In mid-afternoon trading on the New York Stock Exchange Monday, Hughes Electronics shares were off $0.25 at $40.875. Hughes Electronics, a subsidiary of General Motors Corp., is the parent company of Delco Electronics Corp."



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