BAE Systems, Inc. on Monday said it has agreed to acquire the military GPS business of United Technologies Corp. [UTX] and the airborne tactical radios (ATR) business of Raytheon [RTN] for a combined $2.2 billion in cash, deals that would add new capabilities in strong demand by U.S. defense customers.

The divestiture of the two businesses is required by U.S. anti-trust authorities as part of the pending merger between UTC and Raytheon. BAE Systems, Inc., which is the U.S.-based business of Britain’s BAE Systems plc, said the proposed acquisitions will close upon receipt of required regulatory approvals and once the UTC-Raytheon merger is completed. That transaction is expected to close in the first half of 2020.

UTC’s military GPS business is part of its Iowa-based Collins Aerospace operations and is being acquired for nearly $1.93 billion. It is expected to provide BAE with a $365 million tax benefit. The business is expected to have about $359 million in sales this year and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $127 million. The business is also expected to grow more than 10 percent annually over the next four years and to keep growing beyond that, BAE said.

For 2019, the GPS business is expected to post $332 million in sales. It had $254 million in sales and $98 million of EBITDA in 2018.

BAE is acquiring Raytheon’s ATR business for $275 million and is expected to receive a $50 million tax benefit. The business is expected to report $127 million in sales in 2019, up from $116 million in 2018.

The GPS and ATR businesses will be integrated into BAE’s Electronic Systems sector and are expected to be immediately accretive to earnings and cash flow once the deals are completed.

BAE sees sales of the GPS products being driven by strong demand for precision munitions, which “is a major strategic thrust for the Electronic Systems sector and these GPS receivers provide secure and resilient position data that can help our PGMs be more precise,” Caitlin Hayden, BAE Systems, Inc.’s spokeswoman, told Defense Daily.

The radio systems feature secure capabilities including anti-jamming, multi-band, multi-channel and encryption, all key to modern battlefields, BAE said.

“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, Inc., 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.”

The UTC Collins GPS business has about 675 employees and has sold more than 1.5 million military receiver solutions with an installed base on more than 200 ground, 40 airborne, and 40 individual weapons platforms worldwide. BAE said that the business provides solutions on the two highest volume Air Force programs. The hardened and secure GPS products include next-generation M-Code technologies, which are mandated by Congress for all military GPS user equipment after October 2020.

BAE said that more than 700 platforms are expected to be transitioned to M-Code.

The military GPS product portfolio is new to BAE and will report to the Precision Strike and Sensing Solutions business area within Electronic Systems, Hayden said.

Raytheon’s airborne tactical radio business has about 100 employees and is based in Indiana and Florida. The business has a strong backlog and sells to the Defense Department, allied governments, and defense aircraft manufacturers.

The radios business includes software-defined radio capabilities and various waveforms.

Hayden said the ATR business complements BAE’s existing data link business based in New Jersey, which primarily sells its products to the Navy and foreign military sales customers for use on ships and jets. The ATR products are typically used on rotary, fixed-wing and unmanned aircraft, many of which BAE does not have positions, and the biggest customers are the Air Force and Army, she said.

BAE said it will fund the GPS deal from new debt and the radios business with cash on hand.

The pending deals also further deepen BAE’s presence in the U.S. defense market.

Bank of America is serving as BAE’s financial advisor on the deals.