A major consolidation of the military communications industry is underway: Harris Corp. has concluded a deal to acquire Exelis.
The acquisition is a cash and stock transaction valued at about $4.75 billion, according to a joint announcement from the companies. The purchase will close in June, pending approval by regulators and Exelis shareholders.
The combined companies will have more than $8 billion in revenue and about 23,000 employees globally, including 9,000 engineers and scientists. “Acquiring Exelis is transformational for Harris,” said Harris CEO William Brown. “The combination of the two companies’ highly complementary core franchises creates a competitively stronger company with significantly greater scale.”
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For military customers of the companies, the deal could force some acquisition rethinking. In 2014, Exelis landed a a $988 million Army contract to provide radio appliqués capable of running the Army’s Soldier Radio Waveform. Recently, the Army released a request for proposals through which it intends to create a “radio marketplace” comprised of several vendors competing for individual delivery orders.
“This is the first major merger among mid-tier defense companies. Clearly this was driven by cuts in the Army’s budget,” said Jim McAleese, a Virginia-based defense consultant, cited in a Reuters report.
Joe Gould of Defense News contributed to this report.
