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© Harris Corporation Electronics Production | October 15, 2018

Harris and L3 Tech to combine in merger of equals

Harris Corporation and L3 Technologies, announces that they have agreed to combine in an all stock merger of equals to create a global defense technology company.
Under the terms of the merger agreement – which has been approved by the boards of directors of both companies – L3 shareholders will receive a fixed exchange ratio of 1.30 shares of Harris common stock for each share of L3 common stock. Once the merger is completed, Harris shareholders will own about 54% and L3 shareholders will own about 46% of the combined company.

The combined company – L3 Harris Technologies, Inc. – will be the 6th largest defense company in the US and a top 10 defense company globally, with approximately 48’000 employees and customers in over 100 countries, according to a joint press release from the companies.

For calendar year 2018, the new combined company is expected to generate net revenue of approximately USD 16 billion, EBIT of USD 2.4 billion and free cash flow of USD 1.9 billion.

“This transaction extends our position as a premier global defense technology company that unlocks additional growth opportunities and generates value for our customers, employees and shareholders. Combining our complementary franchises and extensive technology portfolios will enable us to accelerate innovation to better serve our customers, deliver significant operating synergies and produce strong free cash flow, which we will deploy to drive shareholder value,” says Harris President and CEO, William M. Brown said, in the press release. “Integration planning is already underway, and from our extensive experience with integration, we are confident in our ability to realize $500 million of annual gross cost synergies and $3 billion of free cash flow by year 3.”

L3 Chairman, President and CEO, Christopher E. Kubasik adds, “This merger creates greater benefits and growth opportunities than either company could have achieved alone. The companies were on similar growth trajectories and this combination accelerates the journey to becoming a more agile, integrated and innovative non-traditional 6th Prime focused on investing in important, next-generation technologies.”

When pointing out the strategic benefits of the merger, the increased scale of the new company is immediately brought up, along side a portfolio of complementary franchises. The increased scale will enable the combined company to be more cost competitive, expand capabilities to provide end-to-end solutions across multiple domains of air, sea, land, space and cyber, enhance leadership in RF and spectrum technologies and establish a leading platform-agnostic supplier and integrator.

The merger is expected to close in mid-calendar year 2019, subject to satisfaction of customary closing conditions.
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November 15 2018 5:25 pm V11.9.0-2