L3 Technologies, a New York-based defense contractor that employs more than 900 people locally, has agreed to join Florida-based Harris Corp. in a merger that reportedly would create a company with $16 billion in revenue.
“The combined company, L3 Harris Technologies Inc., will be the sixth largest defense company in the U.S. and a top 10 defense company globally, with approximately 48,000 employees and customers in over 100 countries,” according to an L3 press release.
The all-stock deal requires regulatory approval.
Announcement of the proposed merger follows L3’s organizational shakeup earlier this year that placed Waco operations in a newly formed Intelligence, Surveillance and Reconnaissance Systems unit, with headquarters in Plano. That unit alone is projected to have 2018 sales of $4.7 billion, and will support 15,000 employees in the U.S., Great Britain, Canada, Italy and Australia, according to information provided by L3.
L3 CEO Chris Kubasik’s desire for L3 Technologies to become a cutting-edge player in the defense and aerospace industries led to the decision to repurpose Waco’s plant formerly involved in traditional airplane modifications and upgrades. It installed avionics systems on planes, performed routine maintenance under long-term contracts and customized private jets for dignitaries and foreign heads of state, spokesman Lance Martin said.
“This merger creates greater benefits and growth opportunities than either company could have achieved alone,” Kubasik wrote in the press release.
Harris CEO William M. Brown wrote that the companies already are discussing “operating synergies” that would free up $3 billion by the third year and create the potential for $500 million in savings annually.
L3 officials said they could not yet comment on the merger’s potential impact on Waco operations.
One L3 official, providing background, said such mergers “sometimes serve to reduce overhead, meaning any duplication of services would be eliminated.”
“I think it’s still too early out to make any predictions,” said Kris Collins, senior vice president for economic development at the Greater Waco Chamber of Commerce. “Harris could see a complement in L3. I hope the deal brings good things to the Waco site. From what I’ve read, if everything goes through as planned, it will create the nation’s sixth-largest defense company, with a new ability to compete for projects neither could pursue alone.”
A spokesperson for U.S. Rep. Bill Flores, whose district includes Waco, said he was not available Tuesday to comment on the merger.
Harris Corp. spokesman Jim Burke said the company can date its founding back almost 125 years. It employs about 17,500 people at locations throughout the U.S., with a heavy concentration on the East Coast, and in Europe, Asia and Latin America.
“We basically provide service to every government agency, with 80 percent of our business being government or defense-related,” Burke said.
Besides tactical communications equipment, including radios, it produces products for use underwater, in space and for the U.S. intelligence service.
“We are the No. 1 provider of tactical radio equipment in the world, though we provide only to U.S. allies, members of NATO,” Burke said. “We share many markets with L3, there is overlap in that respect, but our product offerings tend to be very different.”
The closest Harris Corp. facility to Waco is in Irving.
The newly created L3 Harris Technologies will be based in Melbourne, Florida. Its 12-member board of directors will consist of six members from each company, according to the press release.
Harris’ CEO Brown will serve as CEO of the combined company for two years after close of the merger, with L3 CEO Kubasik starting as chief operating officer. Kubasik would become chief executive in the third year, and Brown would become executive chairman of the board.