L3Harris Announces Definitive Agreement to Sell Non-Core Assets to an Affiliate of Kanders & Company, Inc. for $200 Million
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Insights
The divestiture by L3Harris Technologies of its antenna and related businesses is a strategic move that could influence the company's financial structure and capital allocation strategy. The $200 million transaction, with $175 million in cash and a $25 million seller note, represents a significant infusion of liquidity. This liquidity could be used for various purposes, such as debt reduction, share repurchases, or reinvestment into core operations, which could potentially enhance shareholder value.
It's important to assess the valuation of the deal in relation to the revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) of the divested assets. Comparing the sale price to the operating performance of the antenna business can provide insights into the deal's attractiveness to both L3Harris and the buyer. The use of a seller note also suggests a level of confidence in the buyer's future performance and an ongoing interest in the divested business's success.
The sale of the antenna and related businesses by L3Harris to an affiliate of Kanders & Company reflects a sharpening focus on core competencies within the defense and aerospace sector. By offloading non-core assets, L3Harris can streamline its operations, potentially improving operational efficiency and profit margins. This move may be well-received by investors looking for companies with a clear strategic direction.
Moreover, the impact on the competitive landscape should be considered. The divestiture may alter market dynamics, either by strengthening a smaller player, such as Kanders & Company, or by allowing L3Harris to better compete with its rivals through a more focused approach. The implications for the Space & Airborne Systems segment, including potential job reallocations or redundancies due to the transition, should also be monitored as they could affect the company's reputation and employee morale.
The antenna and related businesses being sold by L3Harris are part of the Space & Airborne Systems segment, which is a highly specialized area within the defense industry. The divestiture could indicate L3Harris's intent to concentrate on higher-margin businesses or areas with more strategic importance. For stakeholders, it's pertinent to understand the technological and defense implications of this transaction.
With approximately 375 employees involved, the transaction has workforce implications. The ability of Kanders & Company to integrate these new assets and personnel will be critical to the success of the acquisition. Additionally, the transfer of technology and contracts will require careful management to maintain continuity of service and fulfillment of obligations to defense customers. The impact on L3Harris's innovation pipeline and its ability to secure new contracts in the Space & Airborne Systems domain post-divestiture should be evaluated.
The agreement aligns with L3Harris’ portfolio-shaping strategy for non-core assets, with transaction proceeds to be used consistent with capital allocation plans. The transaction is made up of
The businesses L3Harris will divest offer a variety of airborne and ground-based antennas and test equipment. They are part of the Space & Airborne Systems segment and employ approximately 375 people.
About L3Harris Technologies
L3Harris Technologies is the Trusted Disruptor in the defense industry. With customers’ mission-critical needs always in mind, our 50,000 employees deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of national security.
About Kanders & Company, Inc.
Kanders & Company, Inc. based in
Forward-Looking Statements
This press release contains forward-looking statements that reflect management's current expectations, assumptions and estimates of future performance and economic conditions. Such statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. L3Harris cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. Important risk factors that could cause actual results or outcomes to differ from those expressed in the forward-looking statements are described in the “Risk Factors” sections of L3Harris’ Annual Report on Form 10-K for the year ended December 29, 2023, and subsequent quarterly reports on Form 10-Q. In addition, the following factors, among others, could cause actual results to differ materially from the forward-looking statements or historical performance: the potential impact on the announcement or consummation of the transaction on relationships, delays in, or failures in respect of, anticipated satisfaction of closing conditions, unexpected costs, liabilities or delays, legal proceedings or the ability to obtain regulatory approvals, or the satisfaction of other closing conditions in a timely manner or at all. Statements about expected transactions are forward-looking and involve risks and uncertainties. L3Harris disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240405231423/en/
Mark Kratz
Investor Relations
InvestorRelations@L3Harris.com
321-724-3170
Sara Banda
Corporate Media Relations
Media@L3Harris.com
321-306-8927
Source: L3Harris Technologies
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