L3Harris Technologies has made a significant move towards focusing more on its defense operations by selling off its space propulsion business for $845 million. The sale to American Industrial Partners (AIP), a private equity firm, will allow L3Harris to concentrate more on its core defense-related operations, which include advanced defense technologies and communications systems.
The sale of the space propulsion business, which was a part of the company’s space and airborne systems segment, includes propulsion systems for satellites and spacecraft, including liquid propulsion systems, engines for missile defense and hypersonic applications, and space protection products. The business generated $500 million in 2020, which is approximately 2% of L3Harris’ total revenue.
This move is part of L3Harris’ strategic plan to refocus its business and invest more in areas where it has a competitive advantage. The company has been focusing on its defense operations for some time and the sale will provide it with the financial resources to invest in these areas.
The sale is expected to close in the summer of 2021, subject to closing conditions and regulatory approvals. L3Harris expects to use the sale proceeds to repurchase shares and invest in growth, which will help the company achieve its goal of being a more defense-focused company.
AIP, the buyer, is a New York-based private equity firm that invests in industrial businesses. It has a strong track record of buying and growing companies in sectors such as defense, aerospace, and industrial services.
This deal is significant for the space propulsion industry as well, as it represents a major transaction between a large defense contractor and a private equity firm. It could potentially lead to more consolidation in the industry, as companies look to focus on their core competencies and sell off non-core assets.
In conclusion, L3Harris’ sale of its space propulsion business is a strategic move that will allow it to focus more on its defense operations. The deal is expected to provide the company with the financial resources it needs to invest in its core competencies, while the buyer, AIP, will gain a profitable business in the space propulsion industry. This could potentially lead to more consolidation in the industry, as companies look to refocus their operations.