Harris Corp. and L3 Technologies Are Close to a Merger Deal, WSJ Says

(Bloomberg) -- Harris Corp. and L3 Technologies Inc. are close to a merger that would give rise to a defense contractor with a market value of $33.5 billion, the Wall Street Journal reported, citing people familiar with the matter.

Negotiations were at an advanced stage as of Friday with the goal of completing an all-stock deal as early as this weekend, the Journal said. While exact terms weren’t available, Harris and L3 are expected to market the transaction as a merger of equals, the newspaper said. It’s possible the talks could fall through before an agreement is reached.

The combination would add to a flurry of aerospace and defense deals amid increased military spending and a boom in jetliner sales. Aircraft-parts maker TransDigm Group Inc. agreed this week to buy Esterline Technologies Corp. for $3.6 billion. Boeing Co. closed its purchase of components distributor KLX Inc. a day before that. United Technologies Corp. is poised to complete its $23 billion acquisition of Rockwell Collins Inc.

Harris and L3 didn’t immediately respond to requests for comment outside normal business hours. The companies are known for their capabilities in communications and electronics, and each gets more than two thirds of its revenue from the U.S. government.

F-35, Surveillance

L3, with a market value of $15.3 billion, slipped 1 percent this year through the close of trading on Friday compared with the 6.5 percent advance of a Standard & Poor’s index of aerospace and defense companies. Harris gained 9.3 percent over the same period, closing the week at $154.87 for a market value of $18.2 billion.

Vanguard Group is the largest shareholder of L3 and the second largest for Harris, controlling more than 11 percent of each company, according to data compiled by Bloomberg.

Harris makes communications systems for battlefield management, as well as for civilian uses such as air-traffic control and wireless network transmission. The Melbourne, Florida-based company was recently selected by Lockheed Martin Corp. to develop a next-generation computer processor for its most advanced jet, the F-35 Lightning II fighter.

L3, based in New York, provides communications equipment such as surveillance gear and cockpit electronics. It also makes night-vision devices, sensor systems and satellite communications.

To contact the reporters on this story: Matthew G. Miller in New York at mmiller144@bloomberg.net;Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net, Brendan Case, Bernard Kohn

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