BAE To Buy Collins Aerospace’s GPS Business; To Acquire Radios From Raytheon

BAE Systems plc (BA.L) has agreed to acquire Collins Aerospace’s Military Global Positioning System business, or GPS business, for $1.925 billion. The GPS business, based in Cedar Rapids, Iowa, is a provider of mission critical military GPS receiver solutions. It is developing the next generation M-Code GPS technologies for the US military.

The GPS business has an anticipated revenue CAGR in excess of 10% over the next four years. The acquisition is projected to be to be immediately accretive in terms of margins, earnings and cash. As an asset purchase, BAE Systems expects the deal to result in tax benefit of approximately $365 million.

BAE Systems has also agreed to acquire Raytheon’s Airborne Tactical Radios business, or Radios business, for $275 million. The Radios business, based in Fort Wayne, Indiana, and Largo, Florida, is a provider of airborne tactical radio solutions. It designs, manufactures and supplies mission-critical communication systems to the US Department of Defense, allied governments and large defence aircraft manufacturers.

BAE Systems expects the acquisition of Radios business to be immediately earnings and cash flow accretive, and achieve a return on invested capital in excess of cost of capital in the first full year post completion. As an asset purchase, the deal is projected to result in a tax benefit of approximately $50 million.

Charles Woodburn, Chief Executive of BAE Systems said: “These proposed acquisitions present a unique opportunity to add high quality, technology focused businesses to our Electronics Systems sector.”

BAE Systems noted that the completion of these acquisitions are subject to successful closure of the Raytheon-United Technologies Corp. merger.

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