L3Harris Technologies has signed definitive agreements to sell its Military Training business to CAE and its Combat Propulsion Systems and related businesses to RENK AG for a combined $1.45 billion. Each transaction is subject to customary closing conditions, including receipt of regulatory approvals, and is expected to close in the second half of 2021.
Under the first agreement, CAE will acquire L3Harris’ Military Training business for $1.05 billion in cash. With annual revenue of approximately $500 million, the Military Training business provides a wide range of training systems, simulations and related services to U.S. and international military customers.
Under the second agreement, RENK AG will acquire L3Harris’ Combat Propulsion Systems and related businesses for about $400 million in cash. With annual revenue of approximately $230 million, the Combat Propulsion Systems business manufactures military engines and transmissions.
“With this announcement, we have now completed or announced divestitures of businesses with a combined $1.4 billion of revenue for $2.5 billion in expected proceeds, and our portfolio shaping process is ongoing,” said William M. Brown, Chairman and CEO, L3Harris.
“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,” he added.
Proceeds from the divestitures are expected to be used for share repurchases.
Morgan Stanley & Co. LLC is acting as financial advisor and Sullivan & Cromwell LLP is serving as legal counsel on the Military Training transaction for L3Harris. Moelis & Company LLC is serving as financial advisor and Simpson Thacher & Bartlett LLP as legal counsel for the Combat Propulsion Systems and related businesses transaction.
CAE is a high technology company, at the leading edge of digital immersion, providing solutions to make the world a safer place. Backed by a record of more than 70 years of industry firsts, CAE continues to reimagine the customer experience and revolutionize training and operational support solutions in civil aviation, defense and security, and healthcare. CAE has the broadest global presence in its industry, with approximately 10,000 employees, 160 sites and training locations in over 35 countries.
Headquartered in Augsburg, Germany, RENK AG is a globally leading manufacturer of high-quality gear units, automatic transmissions, slide bearings, suspension systems, couplings and test systems. It serves a diverse range of end-markets with a particular focus on armored vehicles, defense and civil marine, energy production, plastics, oil & gas and others. With over 2,600 employees, RENK AG generated EUR 559 million of revenues in 2019.
L3Harris Technologies is an agile global aerospace and defense technology innovator, delivering end-to-end solutions that meet customers’ mission-critical needs. The company provides advanced defense and commercial technologies across air, land, sea, space and cyber domains. L3Harris has approximately $18 billion in annual revenue and 48,000 employees, with customers in more than 100 countries.