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BAE Systems PLC (BAESY) said Monday that it has agreed to buy Collins Aerospace’s Military Global Positioning System and Raytheon’s Airborne Tactical Radios businesses for a total price of $2.2 billion.
The defense-and-security company BA, +1.46% BAESY, +0.83% said that it will pay $1.93 billion for Collins Aerospace’ GPS business and $275 million for Raytheon Co.’s RTN, -0.42% (RTN) radio business. Both acquisitions are subject to the closure of the ongoing merger between Raytheon and Collins Aerospace’s parent company United Technologies Corp. UTX, +0.55% (UTX) .
BAE said the GPS business is expected to generate a revenue of $359 million and adjusted earnings before interest, taxes, depreciation and amortization–which strips out exceptional and other one-off items–of $127 million this year. It added that it anticipates the business to be “immediately earnings and cash flow accretive,” and that it will generate returns on investment from its third full year of trading.
BAE also said that the radio business is expected to generate $125 million for 2019.
BAE’s Chief Executive Charles Woodburn highlighted the strategic nature of these acquisitions, which are “focused on areas of highest priority defense spending” in the U.S.
