In a boost to its defense business in the U.S. market, the aviation training specialist CAE Inc (CAE) has agreed to buy L3Harris Technologies’ (L3Harris) military training division. It is expected the deal will augment the development of training systems for remotely piloted aircraft, submarines, fighter and bomber aircraft; the company is currently a major producer of full-flight simulators for both Boeing and Airbus and the deal will double its specialist’s defense business. It is anticipated that revenues will be split roughly 50:50 between defence and civil after the deal closes, as expected, in the second half of 2021.
CAE is the world’s largest civil aviation training company, and the deal will be funded by a private placement of approximately US$550 million from two institutional investors, while one of Canada’s principal pension funds, Caisse de dépôt et placement du Québec (CDPQ), has confirmed it will be investing US$375 million, making it the largest shareholder in the company. Having posted a 50% slump in third-quarter profit, CAE expects the acquisition of L3Harris to add to earnings in the first full year after closing and projected annual cost savings of approximately US$27.57 million to US$35.7 million after the second year. Once the deal has been finalized, the training division of CAE will be based in Tampa, Florida. (Update 03/03/21 This article has been updated to provide total clarification that CAE is to acquire only the military training element of L3Harris Technologies, which was not made clear in the originally published article.)Email Post to a Friend