Harris merges with L3 in all contracts, creating the defense giant

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Congress passed the National Defense Authorization Act for 2018, representing an 18% increase in defense spending.

Harris Corporation and L3 Technologies have decided to merge all their shares, creating the sixth largest US defense subcontractor, with an annual business turnover of about $ 16 billion, announced Sunday. two companies.

This agreement is the latest example of how defense spending under US President Donald Trump and the Republican-led Congress is pushing entrepreneurs to merge in order to have more resources to bid on larger projects, ranging from modernization of obsolete computer systems to space exploration.

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

The merger follows a series of deals made over the last 18 months between defense contractors. Last year, United Technologies Corp acquired Rockwell Collins for $ 30 billion and in March the TransDigm group continued its buying spree by signing a $ 525 million contract for Extant Components Group.

The increase in the United States defense budget and the conclusion of a two-year budget agreement reached earlier this year, aimed at lifting ceilings on defense spending, also encouraged buyers.

The merged company, L3 Harris Technologies, Inc., will be the sixth largest defense company in the United States and one of the ten largest defense companies in the world, with approximately 48,000 employees and customers in over 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.