Company aims to lead the market in land mobile radio systems
Communications and IT company Harris has agreed to acquire Tyco Electronics’ Wireless Systems business for $675m to expand its presence in the $9 billion global land mobile radio systems market.
According to Harris, Tyco’s wireless systems division provides systems for law enforcement, fire and rescue, and public service organizations. It had revenue of $463m in the fiscal year ended September 2008. Upon completion of the transaction, it will operate as a business unit in Harris’s RF Communications division.
Under the definitive agreement, Harris will purchase the Wireless Systems assets of Tyco Electronics for $675m in cash, subject to post-closing adjustments. The goodwill arising on completion of the acquisition will be an allowable tax expense with an estimated net present value of $60m, resulting in an effective purchase price of $615m. The transaction excludes the State of New York wireless network contract awarded to Wireless Systems in December 2004. Wireless Systems’ revenue for the fiscal year ending September 26, 2008, was $463m, and earnings before interest, taxes, depreciation and amortization (EBITDA) was $86m.
The acquisition is expected to be slightly accretive to Harris earnings in fiscal 2010, excluding acquisition-related charges, and a significant contributor to earnings in fiscal 2011 and fiscal 2012. Morgan Stanley acted as the financial advisor to Harris, while Jones Day provided legal advice, said the company.
Dana Mehnert, president of Harris RF Communications, said: This acquisition creates an opportunity for growth in both North American and international markets. Complementary distribution channels will provide Harris with immediate access to state and local government markets for our new Unity family of multiband radios and will expand the reach for Wireless Systems infrastructure and single-band radios to the Department of Defense, US federal agencies, and international customers.