Leidos (NYSE: LDOS) has agreed to buy the security detection and automation businesses of L3Harris Technologies (NYSE: LHX) for $1B in cash to broaden its product portfolio in the global security market.
The boards of directors of both firms approved the deal, which is expected to conclude by the end of the second quarter of 2020 and to be accretive immediately to Leidos’ revenue growth, earnings before interest, tax, depreciation and amortization margins and non-GAAP diluted earnings per share upon completion, Leidos said Tuesday.
"The acquisition of these businesses will help accelerate our growth and innovation and enable us to offer the market a comprehensive security platform," said Roger Krone, chairman and CEO of Leidos and a 2020 Wash100 award winner. "The businesses further our commitment to a diversified revenue stream, by expanding our customer penetration into 75 additional countries.”
L3Harris’ security detection and automation divisions are headquartered in Tewksbury, Mass., and Luton, England, respectively, and operate with 1,200 employees combined. The businesses provide automated tray return systems, airport screening products and other industrial automation platforms to clients in the government, critical infrastructure, transportation and aviation markets.
Leidos will use its cash on hand and incremental debt to fund the transaction, which is expected to grow the company’s international client base and complement its global border and port sales channel.
Credit Suisse Securities (USA) acts as Leidos’ financial adviser in the transaction, while PwC serves as the company’s operations and accounting adviser. DLA Piper and Fried, Frank, Harris, Shriver & Jacobson LLP advise Leidos on the deal’s legal aspect.