Raytheon Company (RTN) is planning to acquire privately held BBN Technologies to boost its advanced networking and speech and language technologies. Raytheon expects to complete the transaction by year’s end.

BBN Technologies was set up in 1984 by Massachusetts Institute of Technology professors Richard Bolt and Leo Beranek with MIT graduate Robert Newman. The company has about 700 employees in its seven U.S. facilities.

Raytheon’s acquisition of BBN Technologies has been planned in accordance with its focus on strengthening its Intelligence and Information Systems segment, whose importance rose in recent times with Pentagon’s emphasis on cyber security and mission-critical intelligence products.

Intelligence and Information Systems segment is the dark horse for growth considering the Pentagon’s ire towards high-cost platform programs. However, Raytheon ended the second quarter of fiscal 2009 with a funded backlog of only $1.8 billion, the lowest among its six operating segments.

Raytheon is the one of the largest aerospace and defense companies in the U.S., with a well-diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services. We maintain our market Outperform recommendation on the shares.
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