Harris Corporation (NYSE:HRS) and Exelis, Inc. (NYSE:XLS) have announced that Harris will acquire Exelis in a cash and stock transaction valued at an approximately $4.75 billion enterprise value, or $23.75 per share. The Boards of Directors of both companies have unanimously approved the acquisition agreement, and the transaction, which is expected to close in June 2015, is subject to closing conditions such as regulatory and Exelis shareholder approval.
The terms of the transaction state that Exelis shareholders will receive $16.625 in cash and 0.1025 of a share of Harris common stock, based upon Harris’ closing price as of Feb. 5, 2015, for each share of Exelis common stock. Once the transaction is closed, Harris shareholders will own approximately 85 percent of the combined company, and Exelis shareholders will own approximately 15 percent. The combined company would have had more than $8 billion in revenue and about 23,000 employees globally, on a pro forma basis for the latest twelve months ended Dec. 31, 2014.
“Acquiring Exelis is transformational for Harris,” said William M. Brown, chairman, president and chief executive officer of Harris. “The combination of the two companies’ highly complementary core franchises creates a competitively stronger company with significantly greater scale. We are expanding in a market, where we have decades of success and a workforce dedicated to providing our customers with innovative and cost-effective solutions for some of their most complex challenges.”
“This agreement to become part of Harris Corporation represents an exciting new chapter for Exelis,” said David F. Melcher, chief executive officer and president of Exelis. “Combining the companies not only creates shareholder value, but the commitment to excellence and innovation that both companies share will significantly benefit customers and provide new opportunities for employees. Our 2014 was another strong year, and we expect to report revenue of approximately $3.25 billion and adjusted operating margin between 12.4 and 12.5 percent, which is in line with our previous guidance.”