Raytheon Company Announces Agreement to Acquire Applied Signal Technology, Inc


o Acquisition enhances Raytheon's capabilities across the full spectrum of integrated sensor solutions for classified and other government customers

o Combination of Raytheon's radar and sensor products with Applied Signal's communications and signals technologies to further enable next-generation intelligence, surveillance and reconnaissance (ISR) solutions

WALTHAM, Mass., Dec. 20, 2010 - Raytheon Company (NYSE: RTN) today announced that it has signed a definitive acquisition agreement with Applied Signal Technology, Inc. (Nasdaq: APSG), a leader in the collection and processing of communications signals to support tactical and strategic intelligence missions. The agreement has been approved by the boards of directors of both companies.

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 world class sensor technology, program management, mission support and system integration capabilities, will provide highly discriminating 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, Raytheon Company. "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 Officer, Applied Signal Technology, Inc.

Following 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, 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."

Completion of the transaction is subject to, among other things, the valid tender without withdrawal of 76.3 percent of the outstanding shares of Applied Signal Technology, Inc. common stock, regulatory approvals including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions. Following completion of the tender offer, any shares of Applied Signal Technology, Inc. not tendered will be converted into the right to receive the same price per share paid by Raytheon in the tender offer. In the event that the minimum tender condition is not met, and in certain other circumstances, the parties have agreed to complete the transaction through a one-step merger after receipt of shareholder approval. The transaction is not subject to any financing condition.

Raytheon Company (NYSE: RTN), with 2009 sales of $25 billion, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 88 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 75,000 people worldwide.

SOURCE Raytheon Company

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