NEW YORK (Reuters) - U.S. defense contractor Raytheon Co (RTN.N) is looking to sell its precision optical systems business and has hired bankers to advise on the process, people familiar with the matter said.
Raytheon ELCAN Optical Technologies, which makes sighting systems for the military such as rifle sights and missile guidance systems, has about $30 million in earnings before interest, tax, depreciation and amortization (EBITDA) and could go for as much as $300 million, these people said.
JPMorgan Chase & Co (JPM.N) is running the auction process for the Raytheon business, according to the people.
Challenged by tightening global budgets and planned U.S. troop withdrawals from the Middle East, military contractors are moving to shed non-core divisions and acquire companies with niche technologies to enhance their growth prospects.
While the ELCAN subsidiary might not offer much growth within Raytheon in the face of softening military spending, potential buyers could boost growth by taking its technology and platform and expanding into adjacent, non-defense markets, the people said.
Raytheon’s ELCAN optics business joins two other optical component makers already on the auction block.
Photonis Group, owned by French private equity firm Astorg Partners, has hired Bank of America Merrill Lynch (BAC.N) to sell the company that could be worth about $700 million, people familiar with the matter told Reuters previously. Another French optical component maker, QioptiQ, is also looking for a buyer, the people had said.
The auction for the Raytheon business is likely to start in September after Labor Day, one of the people said, adding that it could draw interest from several U.S. defense companies like FLIR Systems Inc (FLIR.O).
A Raytheon spokesman said the company does not comment on rumors or speculation. JPMorgan declined to comment.
Reporting by Soyoung Kim; editing by Carol Bishopric