RTN Raytheon Co

By Doug Cameron 

The Pentagon on Thursday awarded Raytheon Co. a contract valued by analysts at up to $5 billion to build a new radar for the Patriot missile defense system, concluding one of the year's most closely watched weapons contests.

The Patriot is one of Raytheon's biggest franchises, and a loss of the Lower Tier Air and Missile Defense Sensor system deal could have threatened its long-term role in what has been one of its best sellers to international customers and the U.S. Army.

Raytheon, the incumbent provider, won a three-way contest that also involved Lockheed Martin Corp. and Northrop Grumman Corp. The award comes just days after shareholders approved the planned merger between Raytheon and United Technologies Corp. to form the world's third-largest aerospace company by sales after Boeing Co. and Airbus.

The company's shares rose nearly 2% in early trade.

Defense sales will represent about 55% of the enlarged company, to be known as Raytheon Technologies Corp, with the Patriot franchise expected to last into the 2050s.

The Patriot is a mainstay of the missile-defense system run by the U.S. Army and been sold to 16 overseas nations, notably to the Middle East.

The new radar isn't due to be fielded before 2022, and though it only accounts for a low single-digit percentage of Raytheon's sales, the importance of the broader Patriot system has created an overhang in the company's shares, said analysts.

Raytheon has invested heavily in radar systems, winning big franchises for the Navy and the Air Force against competition from Lockheed Martin and Northrop Grumman.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

October 17, 2019 09:50 ET (13:50 GMT)

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