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Hughes Electronics Corporation was formed in 1985 when Hughes Aircraft was sold by the Howard Hughes Medical Institute to General Motors for $5 billion. The surviving parts of Hughes Electronics are today known as the DirecTV Group.
Howard Hughes donated Hughes Aircraft to the newly formed Howard Hughes Medical Institute in 1953 allegedly as a way of avoiding taxes on its huge income. Hughes left no will and following his death in 1976 there were numerous claims to his estate. A Hughes executive and a Hughes lawyer claimed they had the right to set up an "executive committee" to take over the running of the HHMI and its Hughes Aircraft subsidiary.
The Attorney General of Delaware Richard R. Wier challenged this and filed suit in 1978. Charles M. Oberly continued the action when he became attorney general in 1983. Oberly stated he wished to see an independent board of trustees to ensure both that the institute fulfilled its charitable mission and that it did not continue to operate as a tax shelter.
In January 1984 Judge Grover C. Brown ruled that the Chancery Court should appoint the trustees because Hughes had not left a succession plan. Brown asked for the both the executive committee and the attorney general’s office to submit a list of recommendations that he could approve. Brown approved a list in April 1984. In January 1985 the trustees announced they would sell Hughes Aircraft either by private sale or public stock offering. On June 5, 1985, General Motors was announced as the winner of a secretive five month, sealed-bid auction. Other bidders included Ford Motor Company and Boeing. The purchase was completed on December 20, 1985 for an estimated $5.1 billion, $2.7 billion in cash and the rest in 50 million shares of GM Class H stock.
General Motors merged Hughes Aircraft with its Delco Electronics unit to form GM Hughes Electronics (GMHE). The group then consisted of:
- Hughes Aircraft
- Delco Electronics
- Hughes Space and Communications
- Hughes Network Systems
In August 1992 GM Hughes Electronics purchased General Dynamics' Missile Systems business. In 1994 Hughes Electronics introduced DirecTV, the world's first high-powered DBS service. In 1995 Hughes Electronic's Hughes Space and Communications division became the largest supplier of commercial satellites. Also in 1995 the group purchased Magnavox Electronic Systems from the Carlyle Group. In 1996 Hughes Electronics and PanAmSat agree to merge their fixed satellite services into a new publicly held company, also called PanAmSat with GMHE as majority shareholder.
In 1997 GM transferred Delco Electronics to its Delphi Automotive Systems business. Late in the year the defense operations of Hughes Electronics (Hughes Aircraft and missile business) were merged with Raytheon. The remaining companies remained under the Hughes Electronics name and within GM.
In 2003 the remaining parts of Hughes Electronics: DirecTV, DirecTV Latin America, PanAmSat and Hughes Network Systems were purchased by NewsCorp from GM and renamed The DirecTV Group. Newscorp sold PanAmSat to Kohlberg Kravis Roberts & Co. (KKR) in August 2004. SkyTerra Communications, Inc. completed its purchase of 100% controlling interest in Hughes Network Systems from the DirecTV Group in January 2006.
- "Virginia lab putting big money into pure research". The Wall Street Journal. Associated Press Financial Wire. 2006-09-22.
|last1=in Authors list (help)
- Griffith, Ted (2005-02-12). "Delaware shaped legacy of 'Aviator'; Court helped Howard Hughes tax shelter become leading charity". The News Journal. p. 1.
- Gillot, Roger (1985-01-10). "Medical Institute to Sell Hughes Aircraft". The Associated Press.
- Potts, Mark (1985-06-06). "GM to Buy Hughes Aircraft; Offer Provides Windfall for Medical Institute". Washington Post. The Washington Post.
- Reuters (1985-12-23). "G.M. Purchase Of Hughes". The New York Times. The New York Times Company.