Defense firms Harris and L3 Technologies will be merging into one company, according to a joint press statement released on Sunday. The merger will be “all-stock,” and will result in the creation of the sixth-largest defense contractor in the United States, according to a report from Reuters.
“This transaction extends our position as a premier global defense technology company that unlocks additional growth opportunities and generates value for our customers, employees and shareholders,” said William M. Brown, Harris Chairman, President, and Chief Executive Officer. “Combining our complementary franchises and extensive technology portfolios will enable us to accelerate innovation to better serve our customers, deliver significant operating synergies and produce strong free cash flow, which we will deploy to drive shareholder value. Integration planning is already underway, and from our extensive experience with integration, we are confident in our ability to realize $500 million of annual gross cost synergies and $3 billion of free cash flow by year 3.”
The new firm, named L3 Harris Technologies, Inc., will be based out of Melbourne, Florida, and will have approximately 48,000 employees. The new company is expecting to see a net revenue of around $16 billion during its first year. The estimated worth of the new entity is $34 billion.
Both Harris and L3 manufacture communication tools and devices for the US Military and several dozen international customers, according to a report from Reuters.
This latest merger is the most recent of a series of mergers between defense companies over the lasts several years. In 2015, defense superpower Lockheed Martin acquired helicopter-maker Sikorsky, according to a report from Forbes. But Lockheed wasn’t the only one looking to spread influence through acquisitions; in April of this year Northrop Grumman Corp bought Orbital ATK for almost $8 billion, and in June, General Dynamics Corp bought CSRA for close to $10 billion.
“This merger creates greater benefits and growth opportunities than either company could have achieved alone, said Christopher E. Kubasik, L3 Chairman, President, and Chief Executive Officer. “The companies were on similar growth trajectories and this combination accelerates the journey to becoming a more agile, integrated and innovative non-traditional 6th Prime focused on investing in important, next-generation technologies. L3 Harris Technologies will possess a wealth of technologies and a talented and engaged workforce. By unleashing this potential, we will strengthen our core franchises, expand into new and adjacent markets and enhance our global presence.”
According to the Financial Times, Brown will serve as L3 Harris Technologies, Inc.’s President and Kubasik will be the new Vice President. The 12-person board of directors will have an equal number of people from both companies.