L3 Commercial Aviation, formed in 2018, consolidated key components of L3’s commercial aviation offerings. The bundle of offerings combined L3’s full suite of services in commercial aviation, including the development and management of on-aircraft avionics, integrated security solutions, and complete pilot training offerings.
L3Harris produces avionic sensors for both military and commercial aircraft, including ADS-B NextGen surveillance systems, configurable voice and data recorders, collision avoidance systems, navigation products, display systems, and processors. The firm’s Commercial Aviation Solutions division produces civil avionics systems, while the Mission Avionics unit provides military airborne mission system processing computers, avionics systems and displays, hardened electronics, weapons release systems, datalinks, and antennas supporting fixed-wing and rotary-wing platforms, including the F-35, F/A-18, and C-130.
“Today’s announcement is consistent with our multi-year strategy to optimize our national security, technology-focused portfolio,” said Christopher E. Kubasik, Chair and CEO, of L3Harris.
The CAS transaction is believed to include the sale of the L3Harris/Thales surveillance joint venture, Aviation Communication & Surveillance Systems (ACSS), and is subject to a right of first refusal. If exercised, an affiliate of TJC will acquire the rest of CAS. The company declined to comment on this speculation.
ACSS produces safety avionics systems for commercial and military aviation. ACSS products include the TCAS 2000 and TCAS 1500 traffic alert and collision avoidance systems, a family of Mode S transponders, and the T2CAS combined traffic and terrain collision avoidance system. ACSS was formed in April 2001, when L3 and Thales Avionics, a wholly owned subsidiary of Thales specializing in avionics and aircraft cabin electronics, formed a joint venture company to operate the assets of L3’s Aviation Communication & Surveillance Systems. Under the terms of the agreement, Thales Avionics purchased a 30 percent interest for approximately $72 million in cash. L3 owns 70 percent of the joint venture and manages it. ACSS, which operated as L3Harris Avionics, provides communications and surveillance avionics systems and services for the global aviation marketplace. The enterprise is located in Phoenix, Arizona, with marketing and support personnel stationed around the world.
L3Harris’ CAS business employs approximately 1,450 people and offers pilot training, flight data analytics, avionics, and advanced air mobility products and services, among other capabilities.
The acquisition includes a $700 million cash purchase price and $100 million earnout based on the achievement of certain 2023 and 2024 financial performance targets, which together represent an approximate 15x LTM 9/30 EBITDA purchase multiple.
The transaction is expected to close in the first half of 2024 and is subject to customary closing conditions and regulatory approvals.