Summary
- The shareholders of Harris Corporation and the shareholders of L3 Technologies have approved the merger.
- Harris and L3 have similar market-caps and both companies are expected to produce earnings growth going forward.
- Management of Harris and L3 both see the merger as creating value for their respective shareholders.
- Harris and L3 have rallied strongly this year, but both companies are still reasonably priced.
- Investors could buy either stock, as the merged company would produce the combined earnings growth of Harris and L3.
Harris and L3 Merging Together
Harris Corporation (NYSE:HRS) and L3 Technologies, Inc. (NYSE:LLL) will merge to form L3 Harris Technologies, Inc. The shareholders of both companies have approved the merger which is expected to be completed by the middle of 2019, subject to regulatory approvals. L3 shareholders will receive a fixed exchange ratio of 1.30 shares of Harris common stock for each share of L3 common stock. Harris shareholders will own approximately 54% and L3 shareholders will own approximately 46% of the merged company.
Management for Harris stated in their press release,
Today's vote clearly supports our view that this merger will unlock additional growth opportunities and generate value for our customers, employees and shareholders.
Management for L3 stated in their press release,
The increased scale of L3 Harris will allow us to deliver comprehensive mission-critical solutions to our customers, while creating value for all of our stakeholders.
Both companies see the merger as beneficial. The merger is expected to increase the operating efficiency of the combined company with costs expected to be reduced by $500 million per year. While $300 million of this is proposed to be returned to its customers by reducing prices, it still leaves $200 million in annual savings.
