Harris Corp. headquarters. Photo courtesy of Harris Corp.
Harris Corp. and L3 Technologies announced a blockbuster deal that would create the sixth-largest U.S. defense contractor with about $16 billion in sales and a market capitalization of $33.5 billion, with Harris shareholders owning 54 percent of the business and L3’s the rest.
The companies said the merger will provide L3 Harris Technologies with the scale to access growth opportunities that neither L3 nor Harris could pursue independently.
“This merger creates greater benefits and growth opportunities than either company could achieve alone,” Christopher Kubasik, L3’s chairman, president and CEO, said in a statement. “The companies were on similar growth trajectories and this combination accelerates the journey to becoming a more agile, integrated and innovative non-traditional sixth prime focused on investing in important, next-generation technologies.”
Kubasik started using the term “non-traditional sixth prime” a year ago to describe L3’s approach to pursue big government programs that require sophisticated integration skills generally performed by large defense prime contractors but with the agility and entrepreneurial qualities that smaller, more nimble companies bring to the table.
Harris and L3 said their increased scale will make them more cost competitive, provide a more comprehensive portfolio to expand end-to-end capabilities and continue as a “leading platform-agnostic supplier and integrator.”
The companies will host a joint investor call Monday to discuss what they are calling a “merger of equals.” The deal is expected to close in mid-2019, subject to approvals by regulators and shareholders of both companies.
Harris will have a controlling interest in the company as its market share is larger than L3’s, whose shareholders will receive 1.3 shares of Harris common stock for each share of their common stock.
William Brown, Harris’ chairman, president and CEO, will serve as chairman and CEO of the new company for two years and Kubasik will be vice chairman, president and COO. After two years, Brown will become executive chairman and Kubasik will become CEO. Eventually, Kubasik will become chairman and CEO.
L3 Harris Technologies will be based in Melbourne, Florida, where Harris is currently headquartered, and have 48,000 employees, including about 22,500 engineers and scientists, in more than 100 countries.
Read the full story on Defense Daily, a sister publication to Avionics International.