Defense suppliers Harris Corporation and Exelis Inc. have merged in a deal that is valued at USD$4.75 billion.
The two joined together last Friday, according to a press release, when the boards of both companies approved the deal that morning.
Both Exelis and Harris are big suppliers of the United States military—both firms having competed for the Soldier Radio Waveform and Rifleman Radio contracts.
William M. Brown, chairman, president and CEO of Harris was delighted over the deal.
"Acquiring Exelis is transformational for Harris. The combination of the two companies' highly complementary core franchises creates a competitively stronger company with significantly greater scale. We are expanding in a market, where we have decades of success and a workforce dedicated to providing our customers with innovative and cost-effective solutions for some of their most complex challenges."
According to the terms of the deal, Exelis shareholders will receive $16.625 in cash and 0.1025 of a share of Harris common stock, based on Harris' closing price as of Feb. 5, 2015, for each share of Exelis common stock. Upon closing, Harris shareholders will own approximately 85% of the combined company, and Exelis shareholders will own approximately 15%.
The economic impact has already been noticeable – Harris Corporation's stock has jumped to $78.30 per share, more than a twelve percent increase.
Exelis was more than happy to sign the agreement, as David F. Melcher – CEO and president of Exelis – stated, "This agreement to become part of Harris Corporation represents an exciting new chapter for Exelis. Combining the companies not only creates shareholder value, but the commitment to excellence and innovation that both companies share will significantly benefit customers and provide new opportunities for employees."
With their powers combined, the firm is now valued as an USD$8 billion tech company with 23,000 employees, which includes 9,000 engineers and scientists.
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