Raytheon to Advance $2.1 Billion Oman Deal on Kerry Visit

U.S. Secretary of State John Kerry arrives in Oman today where he will highlight the Persian Gulf nation’s intent to purchase a $2.1 billion air-defense system from American contractor Raytheon Co. (RTN)

While details of Oman’s agreement to buy the ground-based air defense system are yet to be completed, a State Department official said that the deal would upgrade the ability of Oman to defend its critical infrastructure from unmanned-aerial vehicles and cruise missiles.

In a verbal agreement four months ago, Waltham, Massachusetts-based Raytheon was chosen over European defense contractors competing for the work and the company’s representatives are expected to sign a letter of intent with Oman’s government during Kerry’s visit, two State Department officials told reporters traveling with Kerry.

The officials, who asked not to be quoted by name because of diplomatic protocols, said the deal would further integrate defensive systems among U.S.-allied Gulf states.

The potential sale to Oman follows a $10 billion arms package that Defense Secretary Chuck Hagel promoted last month to other countries in the region including Israel, Saudi Arabia and the United Arab Emirates. The U.S. has been steadily boosting the offensive and defensive capabilities of its allies in the Middle East to counter Iran, which is suspected of developing nuclear weapons.

Raytheon’s Opportunities

Raytheon Chief Executive Officer Bill Swanson in April said the potential deal with Oman was among several other opportunities in the Middle East.

“Our portfolio of international opportunities remains robust and includes Kuwait Patriot, the Oman ground-based air defense system, the Qatar air defense system, air traffic management, as well as radars and missiles,” Swanson told analysts while discussing the company’s first quarter earnings last month. “We’re making considerable progress on these opportunities.”

Raytheon spokesman Jon Kasle declined to offer additional details after the remarks by U.S. officials.

A letter of intent is the first step in the U.S. foreign arms sales process that could take years to conclude. Once the details of a country’s requirements are ascertained, the Pentagon’s Defense Security Cooperation Agency notifies Congress of the U.S. intention to sell arms. If lawmakers raise no objection, the Pentagon enters into negotiations with the buyer to sell the equipment.

To contact the reporters on this story: Indira A.R. Lakshmanan in Shannon, Ireland at ilakshmanan@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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