U.S. defense contractor Raytheon Co. reached a $490 million deal to acquire Applied Signal Technology Inc., which makes equipment that militaries and governments use to detect threats.

Raytheon said Monday the deal for Applied Signal, which makes equipment to detect everything from submarines to computer hackers, expands its lineup of intelligence products.

Raytheon edged out bidders including L-3 Communications Holdings Inc. and Cobham PLC, which had also expressed interest in the cybersecurity firm, sources told Reuters earlier this month.

Raytheon said it would pay $38 per share for Applied, an 8.5 percent premium to the company's Friday closing price.

Applied shares rose 8 percent to $37.83 in premarket trading.

The companies expect the deal to close in the first quarter of 2011.

Shares of Applied Signal have gained 26 percent since the company hired Bank of America Merrill Lynch in October to look into a possible sale.