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Harris Corporation had been in talks with potential suitors for some time, but recent takeover speculation in the financial press has given dialogue new legs, dealReporter has learnt. Although the company was not said to be running any formal sale process, Harris is in talks with multiple parties, and given the current industry environment is very interested in a potential deal.
It is further understood that various parties are more advanced than others in terms of discussions. Harris was said to be in preference of a sale in its entirety than a break-up of any sort, although is it possible for the Florida-based company to sell individual assets. The company was said to have an open mind about its options, and that negotiations could lead down a variety of different paths.
Harris has expressed a rich asking price around the USD 70–75 price per share range, said an industry banker who is working with a potential buyer for the company. “With the current consolidation and upcoming withdrawal of troops from Iraq, Harris has a much stronger desire to see what’s out there,” he said. The banker claimed to have heard that four or five parties had signed confidentiality agreements, although some had since lost interest. Referring to the re-energizing effect that a recent Wall Street Journal article had on some buyers, the banker claimed that “a few had come back to take a closer look, mainly out of concern that it could come down to a rival bid… to look at the business with a bit more urgency.”
There is currently no strict timeline or any formal process, the banker noted, although this could change overnight depending on the outcome of discussions. The size of the company and price have been at the forefront of potential buyers concerns, he added.
An industry executive at a leading defense firm claimed to have heard rumors that Harris had been in talks with Lockheed Martin and L3 Communications over the past two years, but that both had passed. General Dynamics could be an interested party at this point, said the executive, but could not confirm whether the Virginia-based company had recently been in talks with Harris. Structural, pricing and regulatory issues could diminish the chances of a deal being struck. Lockheed, L3 and General Dynamics were not available for comment at press time.
Although Harris’ defense businesses are attractive, a significant part of Harris’ revenues are derived from its commercial business. However a defense buyer would need to be comfortable swallowing all of Harris, as it is not a breakup candidate, a second industry banker said, adding that it would not make sense for the company to sell in parts, but only as a whole.
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