Harris Corp. announced on February 6 that it will acquire Exelis for $4.75 billion, combining two major U.S. government and military contractors. Melbourne, Fla.-based Harris expects the transaction to close in June, subject to approval by Exelis shareholders and regulatory vetting.
The combined company will be named Harris. It will have revenue of $8.2 billion, 23,000 employees and supplier positions in U.S. government space, weather, air traffic management and military tactical communications systems.
In a fiscal year second-quarter earnings call with analysts, Harris chairman, president and CEO William Brown described the acquisition as a “transformational” and “highly strategic” merging of two engineering companies with complementary offerings. “This powerful combination creates an industry innovator with much greater scale, providing a broad spectrum of technology-based advanced communications solutions,” Brown said.
Exelis, based in McLean, Va., was spun off as an independent company from ITT Corp. in 2011. Thirty-four percent of its revenue is derived from information systems, including its ownership and operation of the ground radio network of the FAA’s automatic dependent surveillance-broadcast (ADS-B) system. Exelis has expertise in surveillance; Harris in communications. The combined company will oversee major components of the FAA’s NextGen ATC modernization, including ADS-B and programs Harris leads: Data Communications, the National Airspace System Voice System and the FAA Telecommunications Infrastructure.
Twenty-nine percent of Exelis revenue comes from electronic systems, including electronic warfare systems it provides to the U.S. Navy and Air Force. The company has a presence on the P-8A Poseidon, the B-52 bomber, the C-130 transport and the AH-64 Apache attack helicopter, and also on international F-16s. Its “flagship” product is the integrated defensive electronic countermeasures (IDECM) system used on Navy F/A-18E/F Super Hornets, “a multibillion-dollar, decades-long program with about 400 systems delivered to date,” Brown said. Harris, meanwhile, supplies avionics subsystems for the F-35 Joint Strike Fighter.
Exelis supplies sensor payloads for the Gorgon Stare wide-area surveillance system the Air Force uses on MQ-9 Reaper unmanned aircraft. Last year, Exelis launched the CorvusEye 1500 wide-area surveillance system, a smaller, commercial version for public safety and international markets.