Blog Coverage Veritas Capital Bags Harris Corp.'s Government IT Services Business
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LONDON, UK / ACCESSWIRE / January 30, 2017 / Active Wall St. blog coverage looks at the headline from Harris Corp. (NYSE: HRS). Private Equity firm Veritas Capital announced on January 27, 2017, that it had signed an agreement with Harris Corp.'s Government IT services business. The transaction is between an affiliate of Veritas and Harris. The all-cash transaction is valued at $690 million and is expected to close in the second quarter of 2017, subject to regulatory approvals and closing conditions. Register with us now for your free membership and blog access at:
One of Harris' competitors within the Communication Equipment space, Motorola Solutions, Inc. (NYSE: MSI), announced on January 23, 2017, that it will post its Q4 and full-year 2016 earnings results after the close of the market on Thursday, February 02, 2017. Motorola Solutions will conduct its quarterly conference call with financial analysts at 5 p.m. ET on the same day. AWS will be initiating a research report on Motorola Solutions in the coming days.
Today, AWS is promoting its blog coverage on HRS; touching on MSI. Get all of our free blog coverage and more by clicking on the links below:
Veritas Capital is a leading private equity firm that primarily invests in companies that provide technology or technology-enabled solutions, to government agencies. Its target industries include - Aerospace & Defense, Communications, Education, Energy, Government Services, Healthcare, National Security, and Technology.
Harris was established in 1890's and is headquartered in Melbourne, Florida. It is a communications and information technology Company serving government and commercial markets in more than 150 countries. Harris has approximate annual revenue of $7.5 billion and over 21,000 employees worldwide.
Sharing his views on the acquisition, Ramzi Musallam, CEO and Managing Partner at Veritas said:
"We look forward to leveraging our extensive experience in the government services market to support the Company's management team and highly skilled employees as they target new opportunities in both core and adjacent markets to grow the business."
William M. Brown, Chairman, President and CEO of Harris added:
"These divestitures sharpen Harris' focus on growing core franchises where technology is a key differentiator, providing compelling value to our customers."
About Harris' Government IT Services Business
Harris's Government IT services business is headquartered in Hendon, Virginia and offers IT and engineering managed services to federal agencies in the Defense, Intelligence, and civilian arenas and operates within the Company's Critical Networks vertical. Some of the agencies using the Company's services include NASA's Space Communications Network and Deep Space Network programs. Harris' Air Traffic Management business is not a part of this divestment and will continue to be part of the Company. The Air Traffic Management Business which provides services the FAA (Federal Aviation Administration) will now operate under Harris' Electronic Systems segment.
The Government IT services business is expected to have revenue of $1.07 billion in FY17.
Reasons for Harris' divestures
The current divestment comes within a month of Harris completing the sale of its CapRock maritime communication business to SpeedCast International Limited for $425 million on January 03, 2017. The proceeds from these sales would be used for the Company's corporate spending like restructuring, share buyback, etc.
Both the divestments are from Harris' Critical Networks Vertical which offers managed services supporting air traffic management, energy, and maritime communications, and ground network operation and sustainment, as well as high-value IT and engineering services. With the sale of the maritime communication as well as the IT and engineered services businesses and the moving of the air traffic management to the Electronics Systems, the Critical Networks vertical will cease to exist. Post the divestment, Harris will now operate only three major business verticals - Electronic Systems, Communication Systems, and Space and Intelligence Systems.
The push to unlock shareholder value has been influenced after activist investor Barry Rosenstein's hedge fund Jana Partners became one of Harris' 10 largest shareholders in August 2016. Harris and Jana Partners entered a deal at the time to appoint two new directors to Harris' Board. The role of the new Directors was to help Harris' Board get maximum value for its shareholders.
Harris expects that these divestments would negatively impact its earnings for the current fiscal year ending in July and would decrease FY18 earnings by $0.10-$0.15 earnings per share.
Stock Performance
Last Friday, January 27, 2017, the stock closed the trading session at $102.53, climbing 1.28% from its previous closing price of $101.23. A total volume of 720.42 thousand shares have exchanged hands, which was higher than the 3-month average volume of 712.46 thousand shares. Harris' stock price advanced 12.77% in the last three months, 19.77% in the past six months, and 23.78% in the previous twelve months. The stock is trading at a PE ratio of 36.19 and has a dividend yield of 2.07%. Additionally, the stock has a market capital of $12.74 billion.
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