Veritas Capital entered into a definitive agreement to acquire government IT services business from Harris Corporation for $690 million.
January 26, 2017
Share
Veritas Capital entered into a definitive agreement to acquire government IT services business from Harris Corporation (NYSE:HRS) for $690 million in cash on January 26, 2017. The transaction is subject to customary purchase price adjustments. In connection with the announcement, Harris Corporation's air traffic management business will now operate as part of Harris Corporation's Electronic Systems segment. As a result, Harris Corporation will have three business segments with no changes to its Communication Systems or Space and Intelligence Systems segments. The government IT services business reported approximately $1 billion of revenues for the year ended December 31, 2016. The transaction is subject to anti-trust approvals, regulatory review and approvals of governmental bodies, approvals from the U.S. Defense Security Service with respect to certain facility security clearances and other customary closing conditions. As of March 10, 2017, FTC granted the early termination notice. The transaction is expected to close in the second quarter of 2017. Proceeds from the transaction will be used to support Harris Corporation's capital allocation strategy, including pension pre-funding and share repurchases. Kenneth M. Wolff, David Kitchen, Erica Schohn and Kenneth Schwartz of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to Veritas Capital. Macquarie Capital (USA) acted as financial advisor to Veritas. Houlihan Lokey acted as financial advisor to Harris Corporation. Scott A. Barshay and Steven J. Williams of Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Harris Corporation. Lazard acted as financial advisor to Harris Corporation. Scott Freling, Heather Finstuen, Alex Hastings, Andrew Guy, and Sara Lacy , John Sorrenti, Evan Sherwood, Patrick Stanton, Jason Workmaster, Paul Rogers, Peter Hutt II, Kim Strosnider, and Jim O’Connell of Covington & Burling LLP acted as a legal advisor to Veritas Capital in this transaction.
L3Harris Technologies, Inc. specializes in the design, manufacturing and marketing of information and communication equipment for the defense, government agency, and commercial structure markets. Net sales break down by family of products as follows:
- integrated mission systems (32.4%): intelligence, surveillance and reconnaissance systems, communication systems, electrical and electronic systems for marine platforms, advanced electro-optical and infrared solutions, etc. ;
- space and airborne systems (28.3%): payload systems, sensors, complete mission solutions, confidential intelligence systems, cyber defense solutions, electronic warfare systems, etc;
- communication systems (23.8%): tactical communication systems, broadband communications, integrated visual communications solutions, etc;
- aviation systems (15.5%): air defense systems, commercial aircraft equipment, pilot training solutions and air traffic management systems.
Net sales break down by source of income between sales of products (78.9%) and services (26.1%).
The United States account for 90.2% of net sales.
L3HARRIS TECHNOLOGIES, INC. 
