L3Harris (LHX) to Sell Antenna & Related Business for $200M – Yahoo Finance

2 minutes, 51 seconds Read

L3Harris Technologies Inc. LHX recently announced that it has signed an agreement to divest its antenna and related businesses for $200 million to an affiliate of Kanders & Co., Inc. Once the deal gets completed, L3Harris will earn cash worth $175 million.

The transaction is anticipated to close in the second quarter of 2024.

The businesses that L3Harris has agreed to sell specialize in a range of airborne and ground-based antennas and test equipment.

Rationale Behind the Sale

L3Harris’ decision to divest antenna’s operations underscores its commitment to reshaping its portfolio by getting rid of its non-core assets. The sale proceeds from this transaction will also help L3Harris in fulfilling its long-term capital deployment strategies.

The latest divestment agreement also seems to be a strategically prudent decision by L3Harris as it remains focused on repaying its debt associated with the acquisition of Aerojet Rocketdyne, which was completed in July 2023 for a net purchase price of $4.72 billion.

In line with this strategy, in November 2023, the company announced that it has agreed to divest the CAS disposal group, which includes both the Commercial Training Solutions and Commercial Aviation reporting units.

With L3Harris’ primary capital deployment priorities involving a focus on debt repayment, which can be potentially accelerated through proceeds from non-core asset divestitures, we may expect the company to sign more such divestiture deals for its non-core assets in the coming days.

Peer Moves

Defense companies often engage in acquisitions, mergers as well as divestments to improve economies of scale as consolidations tend to expand and strengthen the product portfolio, while divestments help focus on their core business structure and improve capital allocation. A few such companies have been discussed below.

Airbus Group EADSY: On Mar 25, 2024, Airbus Defence and Space entered into an agreement to acquire INFODAS. With the acquisition, Airbus will be able to strengthen its cybersecurity portfolio for the benefit of its customers.

EADSY boasts a long-term (three-to-five years) earnings growth rate of 12.4%. The Zacks Consensus Estimate for 2024 sales implies a 9.5% improvement over the previous year.

Triumph Group TGI: On Mar 1, 2024, Triumph Group completed the sale of its Product Support business to AAR Corp. for $725 million. The divestiture will enable TGI to strengthen its balance sheet and focus on the OEM component, spares and IP-based aftermarket business.

TGI boasts a long-term earnings growth rate of 2.6%. Its share price has surged 31.2% in the past one year.

BAE Systems BAESY: On Feb 16, 2024, BAESY completed the acquisition of Ball Corporation’s unit, Ball Aerospace, for $5.5 billion. Through this acquisition, BAE Systems will be able to expand into highly attractive markets like military and civil space, C4ISR and missiles and munitions.

BAESY boasts a long-term earnings growth rate of 12.9%. The Zacks Consensus Estimate for 2024 sales implies a 34.1% improvement over the previous year.

Price Performance

In the past year, shares of L3Harris have gained 4.9% against the industry’s 14.9% decline.

Zacks Investment ResearchZacks Investment Research

Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank

L3Harris currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Triumph Group, Inc. (TGI) : Free Stock Analysis Report

Bae Systems PLC (BAESY) : Free Stock Analysis Report

Airbus Group (EADSY) : Free Stock Analysis Report

L3Harris Technologies Inc (LHX) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

This post was originally published on 3rd party site mentioned in the title of this site

Similar Posts