L3 looks to strengthen its C6ISR portfolio with new acquisitions

NEW YORK. L3 Technologies officials entered into definitive agreement to acquire Azimuth Security and Linchpin Labs, two information security businesses that will strengthen L3’s existing C6ISR [Command, Control, Communications, Computers, Cyber-Defense and Combat Systems, and Intelligence, Surveillance and Reconnaissance].

The acquired companies will become L3 Trenchant upon completion of the transaction and will help deliver advanced capabilities integral to a variety of complex ISR and classified missions.

Based in Australia, Canada, the United Kingdom and the United States, Azimuth and Linchpin operate in the fields of computer network operations and vulnerability research for intelligence partners and other government, defense, and security agencies.

“These pioneering intelligence solutions – the ‘I’ in ISR – give our customers an intelligence advantage through next-generation network security and threat mitigation,” says Jeff Miller, L3’s Senior Vice President and President of its Sensor Systems business segment.

The combined purchase price for the two businesses was approximately AUD$270 million (approximately $200 million). The purchase price is subject to an upward adjustment of up to AUD$43 million (approximately $32 million), payable in L3 common stock, based on the combined company’s post- sales for each of the 12-month periods ending June 30, 2019 to 2021, which would be payable in 2019 to 2021.

This transaction is anticipated to be completed during the second half of 2018, subject to customary closing conditions and regulatory approvals. For 2019, Trenchant is expected to add approximately $65 million to net sales after amortization of acquired deferred revenue and to be slightly earnings per share accretive after employee retention expenses and business combination purchase accounting adjustments, including intangible asset amortization expenses.

L3 Technologies recently sold its Vertex Aerospace business units to reshape and align the company's portfolio with customers’ priorities, says Christopher E. Kubasik, L3’s Chairman, Chief Executive Officer and President. The company has also acquired Applied Defense Solutions (ADS), an aerospace engineering, software development, and space situational awareness company.

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