BAE Systems to Purchase Collins Aerospace’s Military GPS, Raytheon’s Radio Businesses

BAE Systems said it intends to buy Collins Aerospace’s military Global Positioning System business  and Raytheon’s Airborne Tactical Radios business for a combined $2.2 billion.

The two high-performing businesses are being sold in connection with obtaining the required antitrust clearances for the previously announced pending merger between Raytheon and United Technologies Corp, BAE Systems said in a news release.

According to BAE, the asset purchase agreement for the Collins military GPS business calls for cash of $1.925 billion, with an expected tax benefit of approximately $365 million. For Raytheon’s ATR business, the purchase agreement calls for cash of $275 million, with an expected tax benefit of approximately $50 million.

“As militaries around the world increasingly operate in contested environments, the industry-leading, battle-tested products of these two businesses will complement and extend our existing portfolio of solutions we offer our customers,” said Jerry DeMuro, CEO of BAE Systems. “This unique opportunity to acquire critical radio and GPS capabilities strengthens our position as a leading provider of defense electronics and communications systems, and further supports our alignment with the modernization priorities of the U.S. military and its partners.”

These proposed acquisitions are subject to the successful closure of the Raytheon-UTC transaction and other customary closing conditions. Upon closure, both business lines would be integrated into the company’s Electronic Systems sector.

BAE Systems, Collins Aerospace and Raytheon have facilities in Huntsville.

“These are strong businesses with talented employees who share our focus on quality and technology innovation,” said Tom Arseneault, President and COO of BAE Systems. “We are confident of a smooth transition that will accelerate our future together and look forward to welcoming these new employees to the BAE Systems team once the transactions are approved.”