Harris and L3 to merge to become the sixth largest US defense subcontractor

NEW YORK (Reuters) – Harris Corporation (HRS.N) and L3 Technologies (LLL.N) have agreed to merge all their stocks, creating the sixth largest US defense subcontractor, the companies said in a joint statement Sunday.

US President Donald Trump's Increased Defense Spending and Republican-Led Congress Urges Firms to Merge to Provide More Ways to Bid in Larger Projects, From Systems Upgrading obsolete computers to space exploration.

In August, Trump signed a defense bill that allowed $ 639 billion in spending, including the purchase of weapons, ships, planes, and the payment of troops.

The all-stock deal values ​​L3 at $ 15.7 billion, slightly above its market capitalization at $ 15.3 billion at the end of the trading session on Friday. The agreement will create a conglomerate of defense electronics and military communications with a market value of approximately $ 34 billion.

"This merger creates more benefits and opportunities for growth than either company could have created alone," said Christopher Kubasik, L3's chief executive, in a statement.

The merged company, L3 Harris Technologies, Inc., will be the sixth largest US defense company in terms of revenue and one of the top 10 defense companies in the world, with approximately 48,000 employees and customers in the United States. more than 100 countries, said the two companies.

The merged company is expected to generate a net business turnover of about $ 16 billion, EBITDA of $ 2.4 billion and free cash flow of $ 1.9 billion, announced the two companies.

Holders of N3 will earn 1.3 Harris common shares, currently valued at approximately $ 201.33 for each N3 share.

The merger follows a series of deals made over the last 18 months between defense contractors.

Last year, United Technologies Corp. (UTX.N) agreed to acquire Rockwell Collins for $ 30 billion and, in March, TransDigm Group (TDG.N) continued its acquisition activities by signing a $ 525 million contract for Extant Components Group.