What is being sold by L3Harris Technologies (Harris Corporation)?

L3Harris Technologies is selling its government services business, which was operated within the Critical Networks segment. This includes operations in space and intelligence, advanced solutions, civil and healthcare, defense, NASA and range, and managed satellite and terrestrial communications.

What is the purchase price for the government services business?

The purchase price is $690 million in cash, subject to customary purchase price adjustments as outlined in the sale agreement.

What are some of the key conditions for closing the sale?

Key closing conditions include the accuracy of representations and warranties, absence of any orders prohibiting the transaction, absence of a material adverse effect, expiration of the Hart-Scott-Rodino (HSR) antitrust waiting period, and receipt of necessary approvals from the U.S. Defense Security Service.

LHX 8-K: Material Agreements & Financial Events

Q: When is the transaction expected to close, and are there any immediate financial impacts?

The transaction is expected to close before the end of L3Harris' fiscal year 2017, subject to satisfaction of closing conditions. The company anticipates recording a non-cash charge of approximately $130 million in its third quarter of fiscal 2017 due to the business being classified as held for sale, which represents an estimated loss on the sale.

Summary

L3Harris Technologies, Inc. (formerly Harris Corporation) announced on January 31, 2017, that it has entered into a definitive agreement to sell its government services business to MHVC Acquisition Corp., an affiliate of Veritas Capital Fund Management, L.L.C., for $690 million in cash. This business, which operated within the Critical Networks segment, includes areas such as space and intelligence, advanced solutions, civil and healthcare, defense, NASA and range, and managed satellite and terrestrial communications. The divestiture is a strategic move to streamline operations and focus on core areas. The transaction is subject to customary closing conditions, including regulatory approvals such as the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close before the end of fiscal year 2017. As a consequence of classifying the business as held for sale, L3Harris anticipates recording a non-cash charge of approximately $130 million in discontinued operations in the third quarter of fiscal 2017, representing an estimated loss on the sale. Investors should note that the company has also agreed to certain restrictive covenants, including a three-year non-competition agreement post-sale.

Key Highlights

1Harris Corporation is selling its government services business for $690 million in cash to MHVC Acquisition Corp.
2The divested business includes operations in space/intelligence, advanced solutions, civil/healthcare, defense, NASA, and communications.
3The transaction is subject to various closing conditions, including antitrust approval (HSR Act).
4The sale is expected to be completed before the end of fiscal year 2017.
5A non-cash charge of approximately $130 million is expected in Q3 fiscal 2017 due to the business being classified as held for sale.
6Harris Corporation will enter into post-closing agreements, including a transition services agreement and intellectual property cross-licensing.
7The company has agreed to a three-year non-competition covenant related to the divested business.

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Material Agreement (Feb 1, 2017)

Summary

Key Highlights

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