Harris Corporation and L3 Technologies to mergeNews
October 15, 2018
MELBOURNE, Fla and NEW YORK. Defense contractors Harris Corporation and L3 Technologies have agreed to combine in an all-stock merger of equals.
Under the terms of the merger agreement, which was unanimously 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. As soon as the merger is completed, Harris shareholders will own approximately 54 percent and L3 shareholders will own approximately 46 percent of the combined company on a fully diluted basis.
The combined company, to be known as L3 Harris Technologies, Inc., will be the 6th largest defense company in the U.S., with approximately 48,000 employees and customers in over 100 countries, company officials said. For calendar year 2018, the combined company is expected to generate net revenue of approximately $16 billion; earnings before interest, tax, depreciation and amortization (EBITDA) of $2.4 billion; and free cash flow of $1.9 billion.
In a statement, William M. Brown, Harris chairman, president and chief executive officer, said, “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. 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 three.”
Additionally, Christopher E. Kubasik, L3 chairman, president, and chief executive officer, said, “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 nontraditional 6th prime focused on investing in important, next-generation technologies. L3 Harris Technologies will possess a wealth of technologies and a talented and engaged workforce. By unleashing this potential, we will strengthen our core franchises, expand into new and adjacent markets, and enhance our global presence.”