Harris closes deal to sell IT services biz to Veritas Capital
By
Ross Wilkers
Harris Corp. completes the $690 million sale of its now-former government IT business to Veritas Capital, which adds nearly $1.1 billion in sales through deal.
Harris Corp. has closed the sale of its government IT business to Veritas Capital for $690 million in a portfolio reshaping move for the military radio maker.
For Veritas, this acquisition adds approximately 3,500 employees and $1.1 billion in IT and managed services revenue from agencies such as NASA and those in national security and intelligence. The business' focus areas include secure communications, space operations and cybersecurity.
Veritas said it will rename and rebrand the business, which will operate as a standalone company with its own management team independent of other entities in the private equity firm's portfolio.
Harris will keep the $3.5 billion air traffic control business formerly part of IT services.
First announced in January, this transaction is the latest in a series of divestitures for Melbourne, Fla.-based Harris since its 2015 acquisition of former rival Exelis for $4.7 billion. That deal was funded with $3.6 billion in debt. The credit ratings agency Fitch said earlier this month the company is on target to pay $2 billion down by the end of its 2018 fiscal year ending July.
Harris sold its former CapRock Communications maritime commercial business to SpeedCast International for $425 million in a deal that closed in January.
Fitch expects the IT services and CapRock divestitures to remove $1.4 billion from Harris’ 2017 revenue.
Both sales took place in light of a move by activist investor group Jana Partners to become one of Harris’ 10 largest shareholders in August and subsequently both parties agreed to a pair of two mutually-acceptable directors.
Under Bill Brown’s six-year CEO tenure, Harris has divested nearly all of its now-former commercial-focused businesses to re-position the company as a more pure-play technology manufacturer for government agencies.
The company has sold its commercial broadcasting, commercial health care and composite aerostructures businesses in that time. Harris inherited the aerostructures business from Exelis.