New York-based L3 Technologies, whose local plant is among Waco’s largest employers, took another step Thursday toward merging with Florida-based Harris Corp. to form what the companies say would be the sixth-largest defense contractor in the country.
L3 stockholders meeting in New York and Harris Corp. stockholders meeting in Melbourne, Florida, on Thursday overwhelmingly approved the proposed stock deal. The votes pave the way for U.S. Department of Justice and European Union consideration, and possible final approval by midyear.
L3’s local plant has been plagued with layoffs in recent years, a flurry of pink slips pushing staffing levels from about 1,600 to 750, according to estimates previously provided by local spokesman Lance Martin.
But a stock swap involving L3 and Harris could put Waco on a new team, L3 Harris Technologies, that would enjoy projected annual revenue of $16 billion and employ about 40,000 worldwide during an era of growth in the U.S. defense budget. About 57 percent of the combined company’s revenue would come from the U.S. military, including 26 percent from the Air Force, 13 percent from the Navy, 10 percent from the Army and 8 percent from other Department of Defense entities, according to a fact sheet the companies published.
The other 43 percent would come from a combination of other U.S. government agencies, foreign governments and commercial customers.
L3 Technologies modifies military aircraft in its 900,000-square-foot facility at the Texas State Technical College airport in Waco, also performing maintenance and upgrades on an array of conventional planes. A companywide shakeup last year put the Waco operation in a newly created Intelligence, Surveillance and Reconnaissance Systems unit, with headquarters in Plano, and new L3 CEO Christopher Kubasik said in an earnings call in 2017 that the company needed to win more work for Waco operations in its competitive bidding.
L3 officials have declined to speculate on employee numbers at specific sites, or whether the merger would create duplication and dictate staff reductions. Martin did not return calls seeking comment Thursday. L3’s national spokeswoman, Jennifer Barton, declined to comment on the merger beyond information the companies have already published or filed with the Securities and Exchange Commission.
Both companies’ next quarterly earnings reports will be May 1, Barton said.
“This vote represents a key milestone in our merger process,” Kubasik wrote in an L3 press release Thursday. “Overall, integration planning is proceeding well as we prepare to capture operational synergies and establish a shared culture of innovation.
“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.”
Harris Corp. Chairman and CEO William Brown wrote in the press release that he is “pleased that our shareholders voted in favor of this strategic combination, which will create a premier global defense technology company. … This merger will unlock additional growth opportunities.”
L3 Technologies, with several locations in Texas, including Waco, Plano and Greenville, reported 2018 sales of $10.2 billion. It specializes in products relating to pilot training, night vision, security at airports and weaponry.
Located in Melbourne, Florida, Harris supports government and commercial customers in more than 100 countries and enjoys about $6 billion in annual revenue, the companies reported.
Upon completion of the merger, Harris shareholders will own about 54 percent and L3 shareholders will own about 46 percent of the combined company, according to a presentation on the merger.
In voting Thursday, Harris stockholders controlling 102.08 million shares voted in favor of the merger, owners of almost 380,000 shares voted against it, and owners of about 150,000 shares abstained, according to an SEC filing.
For L3, owners of 64.53 million shares voted in favor of the merger, owners of 1.94 million shares voted against it, and owners of almost 310,000 shares abstained, according to L3’s SEC filing.
When the merger was announced in October, the combined company would have had a value of almost $34 billion, based on the companies’ stock prices, according to information published by the companies.