Boeing blast off in $3.75 billion deal

Regulators from Europe and the USA have given Boeing approval to buy the satellite and components businesses of Hughes Electronics Corporation for $3.75 billion.

The deal lands Boeing the world’s leading geostationary satellite maker and provides a key component for its plans to expand into space.

The deal has, however, prompted minor restrictions to preserve competition in the industry.

A consent decree announced by the Federal Trade Commission prohibits Boeing’s space unit from viewing sensitive data obtained when launching competitors’ satellites, and still requires approval in court

Boeing President, Harry Stonecipher, said he was happy the antitrust reviews were finished and that Boeing could cope with the caveats.

With its Delta rockets and Sea Launch ocean-based platform, Boeing launches satellites built by Hughes and its rivals, including Loral Space & Communications, the Lockheed Martin Corporation, and Alcatel Space Industries.

Lockheed, a competitor with Boeing in the launch vehicle platform market, had objected to the deal but declined to comment on the regulators’ decision.

The European Commission said it was satisfied with the pledges to preserve competition Boeing and Hughes had made during a four-month probe.

Hughes, a subsidiary of General Motors Corporation, holds approximately 35 to 40 percent of the market for commercial geostationary satellites.

Boeing executives have pledged to double the revenues from its space and communications unit in five years, up from $6.8 billion in 1998.

As in its core commercial jet business, which produced two-thirds of its $58 billion in sales last year, and its $12.2 billion military aircraft and missile unit, Boeing expects major growth in services in its space unit.

The Hughes purchase looks set to boost Boeing’s space revenues by about 30 percent, although satellite makers as a whole are growing at about 3 percent a year.

“Growth in satellites is not why we acquired Hughes at all. We acquired it for its intellectual capital, for its people and their bright ideas,” said Stonecipher.