Sale of Hughes Would Dilute GM ’98 Profit

General Motors Corp.’s planned sale of its Los Angeles-based Hughes defense business will reduce the auto maker’s earnings by 5 cents a share in 1998 and won’t have an impact in 1999, Chief Financial Officer J. Michael Losh said. GM, formally approving terms of the previously announced action, valued the spinoff and subsequent sale to Raytheon Corp. at $10.1 billion, based on a Raytheon share price of $60. GM also valued Hughes’ Delco Electronics unit at $6.5 billion, the first time GM has publicly placed a value on that business. Delco will be transferred to GM as part of the transaction, then merged with GM’s Delphi auto parts unit. The complicated transaction is designed to unlock shareholder value at GM by distributing shares in the new combined Raytheon defense unit and leaving GM’s remaining automotive and telecommunications business more focused. Holders of GM common stock will get the equivalent of $4.12 in Raytheon-Hughes stock for each GM share. GM shares rose 69 cents to close at $68.50 on the New York Stock Exchange.