Harris Corp. (NYSE: HRS) has agreed to sell itsÂ maritime energy communicationsÂ business to global satellite services companyÂ SpeedCast International for $425 million in the military radio maker’s first divestiture since its August agreement with activist hedge fund Jana Partners.
This move is part of Harris’ larger effort to examine non-core businesses and also lighten debt load from the $4.75 billion acquisition of Exelis in May 2015, which credit rating agency Moody’s says was funded with $3.6 billion in debt.
Melbourne, Florida-basedÂ HarrisÂ sold its former aerostructures businessÂ inherited from Exelis for $215 million inÂ April as part ofÂ that portfolio review andÂ also offloaded the commercial healthcare division in July 2015Â for an undisclosed sum.
Harris expects to close theÂ sale of its CapRock Communications business in the first quarter of calendar year 2017 pending regulatory reviews.
“Portfolio shaping supports our strategy to invest in businesses where Harris can provide technology differentiation, ” CEO Bill Brown told investors during Harris’ first quarter earnings callÂ Tuesday.
“We’ll continue to review our portfolio and objectively assess which businesses are a strategic fit and which businesses have better value under different ownership structure.”
The companyÂ reported $7.5 billion in its last fiscal year ended June 30 and has a market capitalization of $11 billion.
Harris announced in SeptemberÂ the names of the two mutual board of directors appointments with investor Barry Rosenstein’s Jana fund, one of the 10 largest shareholders, and said it would continue the portfolio review.
ReutersÂ first reported Harris’ efforts to divest CapRock Oct. 4 and said the company is also looking to sell its information technology services division along with other parts of its critical networks segment.
The sale of CapRock also lowers Harris’ exposure in anÂ energy marketÂ that has seen oil prices hold lower on a global supply glut as the crude pricing benchmark in New YorkÂ isÂ down 44 percent over three years.
Declines in revenue from CapRock led HarrisÂ to cut FY 2016 revenue expectations in FebruaryÂ and was followed by another sales outlook reduction later in May on a slowdown in demand across the Middle East.
Harris purchased CapRock in 2011 for $525 million.
Shares in Harris have added 2.9 percent since the year started and are up 12.4 percent over 12 months.