Raytheon Buys Texas Instruments Division

As defense companies combined around it, Raytheon Co. faced a choice: Get bigger or get out.

On Monday, Raytheon put its money on the table with an agreement to buy Texas Instruments’ defense business for $2.95 billion. The deal increases its chances of being one of the surviving defense contractors.

“The defense business is changing rapidly and significantly. And recent transactions in the industry have redefined what it now means to be a leader,” Peter D’Angelo, Raytheon’s chief financial officer, said in a telephone news conference.

Texas Instruments Defense Systems & Electronics Group employs about 12,000 people and had projected 1996 revenue of about $1.8 billion.