WASHINGTON — BAE Systems announced Monday that is has reached an agreement to buy two subsidiaries being divested for antitrust reasons by Raytheon and UTC as part of the merger between the latter two companies.
The agreement includes Collins Aerospace’s military Global Positioning System business, a UTC subsidiary, as well as Raytheon’s Airborne Tactical Radios (ATR) business. The GPS sale involved $1.925 billion in cash with an expected tax benefit of approximately $365 million; the ATR deal will cost $275 million in cash, 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,” Jerry DeMuro, CEO of BAE Systems, said in a statement.
“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,” added DeMuro, who will be retiring come April.
Raytheon and UTC announced plans to merge into the newly named Raytheon Technologies Corporation in June. It is expected the merged company will become the second-largest defense player in the world, behind only Lockheed Martin, even as company executives are hoping for a roughly 50-50 split of defense and commercial sales.
The Collin’s GPS business is based in Cedar Rapids, Iowa. Per a BAE statement, the company “designs and produces advanced, hardened and secure GPS products to include M-Code, anti-jamming, and anti-spoofing technologies,” with an installed base of “over 1.5 million devices on approximately 280 platform types around the world, including ground, airborne, and weapon systems.”
The ATR business is based in Fort Wayne, Indiana, and Largo, Florida, and “has leveraged its innovative technologies to develop secure communications solutions that are installed on a broad range of military airborne platforms," per the release.
Should the deal be approved by regulators, both groups will join BAE’s Electronic Systems unit.
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.