TEXTRON TO BUY CESSNA TO OFFSET DEFENSE DECLINE

TEXTRON TO BUY CESSNA TO OFFSET DEFENSE DECLINE

Textron Inc. agreed to acquire Cessna Aircraft Co. for $600 million, apparently outbidding fellow New England defense contractor Raytheon Co. for the business jet manufacturer.

Textron, based in Providence, R.I., said the planned acquisition, announced late Monday, was made in response to the tough times facing defense companies."This will help us to offset the decline in defense spending on aerospace programs which we foresee in future years," James F. Hardymon, Textron's president and chief executive, said in a statement. Textron's aerospace technology division makes Bell helicopters and Lycoming engines.

Textron's successful bid appeared to be a blow for Raytheon's similar efforts to reduce its reliance on defense work. The Lexington, Mass.-based company, whose non-defense businesses include Beech Aircraft, confirmed Monday that it had been in the bidding but would not disclose how much it offered.

Raytheon earlier had said Beech and Cessna, both based in Wichita, Kan., would complement one another well. Cessna, which was put on the block last fall by parent General Dynamics Corp., is the leading maker of small and medium-sized business jets, with an estimated 60 percent of world market. Beech primarily makes turboprop planes although it recently entered the business-jet field with its Beechjet line.

By acquiring Cessna, Raytheon could have increased its clout in a stagnating, highly competitive market. Sales of business jets have been sluggish since the mid-1980s, as cost-conscious companies have sold off their corporate jets, which range in price from $2.5 million to $25 million.

Still, Raytheon's Beech Aircraft profits have rebounded in recent years, primarily through cost-cutting efforts. Raytheon reported Monday that Beech had a 1991 pretax profit of $106 million, up 33 percent from $80 million in 1990, on nearly flat sales of $1.1 billion.

Cessna is expected to report roughly similar 1991 results, with operating profits of an estimated $100 million on sales of about $820 million.