Raytheon to Acquire Applied Signal Technology

Raytheon Company has signed a definitive acquisition agreement with Applied Signal Technology Inc., which collects and processes communications signals to support tactical and strategic intelligence missions. The boards of directors of both companies approved the deal.

Under the terms of the agreement, Raytheon will commence a tender offer to purchase all of the outstanding shares of Applied Signal Technology Inc. common stock at a price of $38.00 per share in cash for an aggregate purchase price of approximately $490 million, net of cash acquired. Pending the successful completion of the tender offer, the transaction is expected to close in the first quarter of 2011 subject to customary closing conditions and regulatory approvals. The transaction is not expected to have a material effect on Raytheon's earnings.

Applied Signal's tactical signals and communications intelligence (SIGINT/COMINT) systems, data fusion and information operations/information assurance products, combined with Raytheon's sensor technology, program management, mission support and system integration capabilities will provide solutions to an expanded range of intelligence and defense customers in the United States and around the world.

"Applied Signal brings world-class technologies and talent that complement Raytheon's strong intelligence, surveillance and reconnaissance solutions," said William H. Swanson, chairman and chief executive officer of Raytheon. "This combination of strengths, along with our complementary cultures of innovation, will provide capabilities to address our customers' current and future challenges while creating value for our shareholders."

Nearly 90 percent of Applied Signal's sales are to classified customers. The company's portfolio includes secure broadband network communications; cyber intelligence systems, software and analytics to address sophisticated cyberspace threats; electronic warfare solutions; and other advanced capabilities that enable customers to detect, evaluate and respond to potential threats. These systems are deployed on a range of strategic platforms worldwide.

"Our history of innovation across a range of strategic and tactical ISR products and services, including significant scale in the fast-growing network intelligence space, together with Raytheon's technology portfolio and development expertise will create strong new capabilities for customers," said William B. Van Vleet, chief executive o fficer of Applied Signal Technology.

After successful completion of the transaction, Applied Signal will be integrated into Raytheon's Space and Airborne Systems (SAS) business. Applied Signal's capabilities offer opportunities for growth at SAS and across the Raytheon enterprise.

"Applied Signal aligns with our strategy of expanding participation in our customers' principal areas of need, particularly ISR systems," said Rick Yuse, president of SAS. "Joining Raytheon's radar, electro-optical/infrared sensors and communications technologies with Applied Signal's SIGINT/COMINT systems will enhance our ability to deliver a full spectrum of integrated sensor solutions."

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