Reston, VA-based Leidos Holdings has announced a definitive agreement to buy the airport security and automation businesses from UK-based L3Harris for $1 billion in cash.
The acquisition follows the merger of L3 and Harris last year. "The agreement provides a stable path forward for the Security & Detection Systems and MacDonald Humfrey Automation businesses, while enabling L3Harris to focus its resources on core technologies," said William Brown, chairman and CEO at L3Harris. L3Harris is now an aerospace and technology company, and the divestiture of its aviation security and automation concerns allows focus on that core.
Funds from the sale are expected to be used to repurchase shares and offset dilution.
The two L3Harris businesses are already successful, with annual revenues of around $500 million. Together, they have 1,200 employees, with more than 20,000 systems deployed across more than 100 countries. They serve customers in the aviation, transportation, government and critical infrastructure markets.
"The acquisition of these businesses will help accelerate our growth and innovation and enable us to offer the market a comprehensive security platform," said Roger Krone, chairman and CEO of Leidos. "The businesses further our commitment to a diversified revenue stream, by expanding our customer penetration into 75 additional countries. This transaction is projected to be immediately accretive to revenue growth, EBITDA margins, and non-GAAP EPS upon closing."
The transaction will be funded from cash on hand and incremental debt, and is expected to close by the end of Q2, 2020 -- subject to customary closing conditions and regulatory approval.
"This powerful portfolio of technology and the outstanding team of employees that support it complement the Leidos team well. The ..
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