By Calvin Biesecker
Harris Corp. [HRS] yesterday said it has agreed to acquire the Wireless Systems business of Tyco Electronics [TEL] for $675 million in a deal that gives it entry into the global land mobile radio market and would make it the second largest provider of land mobile radio systems behind Motorola [MOT].
The pending acquisition “will clearly accelerate our entry into the global land mobile radio market,” Howard Lance, chairman, president and CEO of Harris, said on a conference call. He said the land mobile radio market is valued at about $9 billion annually, with about half of that in the United States.
Harris said the cash deal, which is subject to post-closing adjustments, will include $60 million in goodwill, which will result in a purchase price of $615 million. The transaction is expected to close by July 3, subject to regulatory approvals.
Harris doesn’t currently play in the land mobile radio business although earlier this year the company introduced its Unity family of radios, which are designed to serve the first responder communities. The multi-band radios are in field testing now and would make it easier for first responders who have to carry multiple single-band radios to talk between different agencies and departments, such as firefighters and policemen.
Tyco’s Wireless Systems business, the former M/A-COM, serves the public safety and public service, federal government, transit and transportation, and utilities markets. In addition to its single-band radios, Wireless Systems provides end-to-end wireless network solutions and support. Lance said the 80-year-old business has well established customer relationships. He also said that Harris’ sales channels with the Defense Department, U.S. federal agencies and international customers, will benefit the Tyco business.
Wireless Systems had $463 million in sales and earnings before interest, taxes, depreciation and amortization of $86 million for the fiscal year that ended Sept. 26, 2008.
Wireless Systems, which has about 1,150 employees, including 500 engineers and scientists, will operate as a business unit of Harris RF Communications segment.
Harris expects the deal to be slightly accretive to fiscal year 2010 earnings, excluding acquisition-related charges, and a major earnings contributor in fiscal years 2011 and 2012. Morgan Stanley is the financial adviser to Harris.