BOISE, Idaho -- Morrison Knudsen Corp., a builder of power plants and industrial facilities, said yesterday that it has agreed to buy Raytheon Co.'s troubled construction and engineering business for $10 million in cash.
The builder of the Hoover Dam and Trans-Alaska pipeline will also assume $500 million in liabilities. Raytheon, the third-largest U.S. defense contractor, will retain responsibility on four nearly completed projects and compensate Morrison Knudsen for any cost overruns on another.
Raytheon last week said that losses at the construction unit hurt first-quarter profit and that it was in talks to sell the business. The unit, which builds power plants and refineries, has been hurt by delays at a project in Britain.
"The good news is they are getting out of [engineering and construction], which has been a major distraction for management for some time," said William Fiala, an analyst at Edward Jones & Co., which has a "hold" rating on Raytheon. "The bad news is it doesn't look like they are getting a whole lot for it."
The unit had sales of $2.7 billion and an operating loss of $61 million last year. The operation, based in Cambridge, Mass., was started in 1993, although the company has been in related businesses since the late 1960s. It has 7,600 employees, with a majority in the United States.
Raytheon, the maker of the Patriot missile, said in February that it plans to sell $500 million of businesses this year as it cuts debt and focuses on more-profitable units. Raytheon has said in the past several quarters that it's had problems on engineering and construction projects such as the designing and building of refineries.
The Class B shares of Lexington, Mass.-based Raytheon rose 18.75 cents to $20.0625 on the New York Stock Exchange. They've fallen 71 percent over the past 12 months. Boise-based Morrison Knudsen rose 62.5 cents to $8.50. Company shares have fallen 23 percent over the past year.