CAE has agreed to buy the military training segment of L3Harris Technologies for approximately $1.05 billion in a strategy to access multiple programs aimed at preparing U.S. warfighters for aircraft and weapon system operations.
Montreal-based CAE said Monday it expects to close the transaction in the second half of this year and forecasts annual cost synergies of between $28 million and $35 million by the end of year two after closure.
The companies jointly support the U.S. Air Force’s Simulators Common Architecture Requirements and Standards program.
L3Harris’ military training business manufactures F-16 simulators and B-2 trainers for USAF and F/A-18 aircrew training platforms for the U.S. Navy and Marine Corps. The unit secured its first military system training contract under USAF’s Ground Based Strategic Deterrent program in September.
The deal — CAE’s fourth purchase since November — covers the AMI simulator hardware manufacturing facility, Doss Aviation and the L3 Link Simulation & Training portfolio.
Marc Parent, president and CEO of CAE, said the company aims to accelerate its growth strategy in the defense and security space through the acquisition and expand its U.S. market presence.
“We are adding new customers, experience on new platforms and building our depth of expertise to address all domains ““ air, land, sea, space and cyber ““ as well as expanding into adjacent markets such as mission and operations support,” Parent added.
CAE’s U.S. subsidiary located in Tampa, Florida, will absorb the military training business upon the deal’s closure.
Goldman Sachs & Co. serves as the exclusive financial adviser to the Canadian aerospace and defense contractor, while DLA Piper and Norton Rose Fulbright provide legal advice on the acquisition process.
RBC Capital Markets acts as CAE’s adviser on the private placements.