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L3Harris to sell certain business units to CAE and RENK for $1.45bn

01 Mar 2021 (Last Updated March 1st, 2021 16:13)

L3Harris Technologies has signed a definitive agreement to divest its military training business to CAE for a cash consideration of $1.05bn.

L3Harris Technologies has signed a definitive agreement to divest its military training business to CAE for a cash consideration of $1.05bn.

The military training business generates annual revenue of approximately $500m. It includes link simulation and training, Doss Aviation and AM.

It provides a wide range of training systems, simulations and associated services to the US and other international military customers.

CAE president and CEO Marc Parent said: “The proposed acquisition represents a significant value creation opportunity for all CAE stakeholders. It accelerates our growth strategy in defence and security and is highly complementary to our core military training business, broadening our position in the United States.

“We are adding new customers, experience on new platforms and building our depth of expertise to address all domains, air, land, sea, space and cyber, as well as expanding into adjacent markets such as mission and operations support.”

Furthermore, L3Harris announced the sale of its Combat Propulsion Systems and related businesses to RENK AG for $400m in cash.

The Combat Propulsion Systems business has an annual revenue of approximately $230m. It manufactures military engines and transmissions.

L3Harris expects to use proceeds from the divestitures towards share repurchases. Both the deals are jointly valued at $1.45bn.

L3Harris chairman and CEO William M Brown said: “With today’s announcement, we have now completed or announced divestitures of businesses with a combined $1.4bn of revenue for $2.5bn in expected proceeds, and our portfolio shaping process is ongoing.

“These agreements place our military training and combat propulsion systems and related businesses with well-suited buyers while positioning L3Harris to further focus on its core technologies and execute its strategic priorities.”

Following completion, the L3Harris military training business would operate under CAE USA.

The transactions are expected to be closed in the second half of this year. They are subject to approval from regulatory authorities and other customary closing conditions.