Leidos Holdings, Inc. (NYSE:LDOS) entered into a definitive agreement to acquire L3 Security & Detection Systems, Inc. and MacDonald Humfrey (Automation) Ltd. from L3Harris Technologies, Inc. (NYSE:LHX) for $1 billion on February 3, 2020. The consideration is payable in cash. Leidos expects to fund the transaction through a combination of cash on hand and incremental debt. As of February 12, 2020, Leidos Holdings signed a term loan agreement in an aggregate principal amount of $1 billion, the proceeds of which will be used to finance the transaction. L3 Security & Detection Systems and MacDonald Humfrey reported annual revenue of $500 million for year ended December 31, 2019. L3Harris employees associated with the acquired businesses will join Leidos. The transaction is subject to the satisfaction of customary closing conditions, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, receipt of certain consents or approvals of the United States Federal Communications Commission, including receipt of regulatory approvals and the completion of an agreed-upon Pre-Closing Restructuring. The Boards of Directors of both Leidos Holdings and L3Harris Technologies unanimously approved the transaction. The transaction is expected to close by the end of the second quarter of 2020. Proceeds from the divestiture are expected to be used by L3Harris to repurchase shares and offset dilution. The transaction is projected to be immediately accretive to Leidos' revenue growth, EBITDA margins and Non-GAAP diluted earnings per share upon closing. The transaction is expected to add approximately $75 million of annualized adjusted EBITDA in 2020.

Credit Suisse Securities (USA) LLC acted as financial advisor, Steven Epstein, Erica Jaffe, Michael T. Gershberg, Daniel Oates, Nathaniel L. Asker, Jason R. Ertel, Steven M. Witzel, Michael J. Alter, Nick Thornton, James J. McCullough, Aleksandr B. Livshits, Jason L. Greenberg and Michael J. Anstett of Fried, Frank, Harris, Shriver & Jacobson LLP and DLA Piper acted as legal advisors and PwC acted as operations and accounting advisor to Leidos. Macfarlanes LLP and Morrison & Foerster LLP acted as legal advisors to Leidos. Evercore Inc. (NYSE:EVR) acted as financial advisor and Scott A. Barshay, Steven J. Williams, John C. Kennedy, Scott M. Sontag, Alyssa F. Wolpin, Jean M. McLoughlin, Peter E. Fisch, H. Christopher Boehning, Claudine Meredith-Goujon, Steven C. Herzog, Yuni Yan Sobel, Marta P. Kelly, William J. O'Brien, Jonathan S. Kanter, Richard S. Elliott, Caith Kushner, Judie Ng Shortell, Jaren Janghorbani, Bruce Birenboim and Michael Vogel of Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisors to L3Harris Technologies. KippsDeSanto & Co. acted as financial advisor to L3 Security & Detection Systems, Inc./MacDonald Humfrey.

Leidos Holdings, Inc. (NYSE:LDOS) completed the acquisition of L3 Security & Detection Systems, Inc. and MacDonald Humfrey (Automation) Ltd. from L3Harris Technologies, Inc. (NYSE:LHX) on May 4, 2020. L3 Security & Detection Systems, Inc. and MacDonald Humfrey (Automation) Ltd. will become part of Leidos Civil Group, led by Jim Moos.