Summary
L3Harris Technologies (formerly Harris Corporation) announced on December 6, 2012, the signing of an agreement to divest its Broadcast Communications Division. The sale is to an affiliate of The Gores Group, LLC, for a total consideration of $225 million. This strategic move involves $160 million in cash at closing, a $15 million subordinated promissory note due fifteen months post-closing with 6% annual interest, and a potential earnout of up to $50 million. The earnout structure is performance-based, tied to the Broadcast Communications Division's revenue exceeding specified targets in each of the calendar years from 2013 through 2016. Each year has an individual cap of $25 million, with unused amounts potentially carrying over, and an aggregate cap of $50 million over the four-year period. This divestiture signals a potential shift in L3Harris's strategic focus, allowing it to concentrate on other core business areas.
Key Highlights
- 1Harris Corporation (now L3Harris Technologies) is selling its Broadcast Communications Division.
- 2The buyer is an affiliate of The Gores Group, LLC.
- 3The total transaction value is $225 million.
- 4The deal includes $160 million in cash at closing.
- 5A $15 million subordinated promissory note with 6% interest is part of the consideration.
- 6An earnout of up to $50 million is contingent on future revenue performance from 2013-2016.
- 7The divestiture is a strategic decision to potentially refocus the company's business priorities.