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The L3Harris logo is seen on the floor of the 2022 Air Force Association conference in National Harbor, Maryland. (Justin Katz/Breaking Defense)
WASHINGTON — L3Harris announced today that it will sell off its Commercial Aviation Solutions (CAS) business to private equity firm TJC for an estimated $800 million, a transaction the company expects will close “in the first half of 2024” if regulators approve.
The sale encompasses a cash purchase price of about $700 million, with the remaining $100 million tied to “earnout based on the achievement of certain 2023 and 2024 financial performance targets,” according to an L3Harris release. L3Harris’s CAS business employs about 1,450 people and provides “pilot training, flight data analytics, avionics, and advanced air mobility products and services,” the release says.
The CAS sale could help meet two of the company’s key objectives: paying down debt and refocusing its portfolio on defense-related contracts.
The company so far this year has closed on two significant defense-related acquisitions. In January, L3Harris completed its purchase of Viasat’s Link 16 line for approximately $2 billion. Then in July, the company absorbed Aerojet Rocketdyne in a high-profile $4.7 billion acquisition, overcoming antitrust concerns that regulators previously lodged against Lockheed Martin.
Following the Aerojet purchase, L3Harris’s debt stood at around $13.5 billion, Chief Financial Officer Michelle Turner told investors during the company’s third quarter earnings call in October. Executives are targeting a reduction plan of about half a billion dollars to get to $13 billion in debt by the end of 2023, according to Turner.
“We’re taking a portfolio approach,” L3Harris Chief Executive Officer Chris Kubasik said during the October call. “We’re looking to acquire businesses that are aligning with our nation’s defense strategy and in growing markets. And then, we’re divesting those businesses that don’t necessarily align with our strategy — but are still good businesses — but not part of our focus.”
Kubasik has for years shared his goal of positioning L3Harris as the sixth major US defense prime, epitomized by the Aerojet and Link 16 purchases as well as the 2019 merger of L3 Technologies and the Harris Corporation. L3Harris’s programs now span sea, land, air, space and cyber operations.
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