Leidos has entered a definitive agreement to acquire L3Harris Technologies' security detection and automation businesses for $1B in cash to add complementary technology and products as well as create a comprehensive security and detection portfolio, Leidos said on Tuesday. The Boards of Directors of both companies unanimously approved the transaction.
“The acquisition of these businesses will help accelerate our growth and innovation and enable us to offer the market a comprehensive security platform,“ said Roger Krone, chairman and CEO at Leidos and a 2020 Wash100 Award recipient.
Leidos will acquire new L3Harris' products with the purchase, which will enable Leidos to create a comprehensive security and detection platform.
L3Harris will supply a variety of new technologies, including CT scanners, people scanners, comprehensive explosives trace detectors, checked baggage screeners and automated tray return systems. With the new devices, Leidos portfolio will strengthen the company's offerings in the global security products market.
The acquisition will also grow Leidos' customer base internationally and will help deliver on a stated objective to diversify revenue globally. The deal will increase Leidos' international security products revenue more than sixfold.
“The businesses further our commitment to a diversified revenue stream, by expanding our customer penetration into 75 additional countries. This transaction is projected to be immediately accretive to revenue growth, EBITDA margins, and non-GAAP EPS upon closing,“ Krone stated.
In addition, Leidos will grow the company's existing successful global border and port sales channel through L3Harris' global airport sales channel across the full Leidos portfolio of products and services. Leidos will also gain new technology investments across the combined portfolio to grow innovation and improve service efficiency.
“This mission is consistent with our company's goal of making the world safer, healthier and more efficient. Together, we will advance our strategy of helping secure some of the world's most critical infrastructure and the individuals who travel through it. I look forward to welcoming these L3Harris employees to Leidos and working together to continue our important work,“ Krone concluded.
The transaction is expected to be immediately. Leidos expects to fund the $1B cash transaction through a combination of cash on hand and incremental debt and is expected to close by the end of the second quarter of 2020, subject to the satisfaction of customary closing conditions, including receipt of regulatory approval.
Leidos is a Fortune 500® information technology, engineering, and science solutions and services leader working to solve the world's toughest challenges in the defense, intelligence, homeland security, civil, and health markets. The company's 36,000 employees support vital missions for government and commercial customers. Headquartered in Reston, Va., Leidos reported annual revenues of approximately $10.19 billion for the fiscal year ended December 28, 2018.